Re likely to stay in 43.30-43.60 range

CURRENCY

The rumour of China's revaluation of the yuan is fast losing steam as Chinese authorities are expected to take time before effecting such a change.

Most global players will continue to cut down their exposure to other Asian currencies and buy dollars before they are caught off-guard.

The GDP data to be released from the United States is likely to be dollar bullish, which will be a trigger for the dollar to move up.

Indian banks and corporate, which had heavily bought dollars expecting a revaluation in the yuan, will reverse their positions and buy dollars. The dollar demand will be met by capital inflows which are making their way into the Indian equity market.

"Next week, the spot rupee will stay firm irrespective of whether there is any action from China. Basically, the positive sentiment in the equity market will keep the rupee up," said K. Jayaraman, head, forex trading, Calyon Bank. The spot rupee is likely to hover in the range of 43.30-43.60 to a dollar.

Forward premiums to rise

The inflation rate has been rising following the surge in global oil prices . This may lead to importers rushing to cover their near-term payment obligations.

This will result in a firmness in premiums on forward dollars. The rising inflation rate has widened the interest rate differential between US and India, which will put pressure on forward premiums to rise.

Recap: The spot rupee lost almost 30 paise last week to end at 43.42/33.43 to a dollar as against Monday's level of 43.72/43.73.

This was primarily on the back of Chinese revaluation. The later part of the week witnessed portfolio investments into the equity market.