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The rupee, which fell sharply against the dollar on Friday, is expected to continue its weak run next week due to the month-end dollar demand, especially from oil marketing companies, coupled with global economic uncertainties. Also, there are chances of a further tapering of the US' monthly bond-purchase programme by the Federal Reserve.
This week was the worst for the rupee since August 2013, when it had touched an all-time low of 68.85 a dollar. On Friday, the Indian currency closed at 62.69 a dollar, compared with its previous close of 61.93.
According to currency dealers, the rupee might even touch 63 a dollar next week, but it is unlikely to breach that level, as the central bank will not allow that to happen.
Developments in the emerging markets like Argentina and Thailand could also weigh on the dollar value, dealers said. The US Fed's Federal Open Market Committee (FOMC), meeting on Tuesday and Wednesday, is expected to consider a further $10 billion taper to lower the stimulus programme to $20 billion a month.
Moses Harding, group chief executive officer (liability & treasury management) & chief economist, Srei Infrastructure Finance, said the rupee was expected to trade between 61.50 and 63.50, taking all domestic and external cues into account. There was no case for the currency to sustain its gains below 61.50 into 61.00, which was seen as a strong short-term base for the dollar till political risk was out of the way, he said.
Alpari Financial Services CEO (India) Pramit Brahmbhatt said the rupee would depreciate further in the coming weeks as the appreciation over the last few weeks came in very thin market conditions. Global markets were closed and there was not much liquidity in the market. If there was a downturn in the equity market, the rupee might even fall to 63.80 a dollar, he said.
Kotak Mahindra Bank President (Group Treasury & Global Markets) Mohan Shenoi said the rupee depreciated on Friday mainly due to a knee-jerk reaction to global currency developments. "However the Indian fundamentals are much better now and the rupee, in all probability, will delink from the Argentina- and Turkey-led currency depreciation. While the rupee may not gain significantly from here (until there is clarity on the shadow banking crisis in China), it may not see too much depreciation, either. Our range for the rupee over next fortnight is 62.00-63.50 a dollar," Shenoi said. Seconding Shenoi's views, B V Chaubal, deputy managing director (global markets), State Bank of India, said the pressure might stay on rupee due to month-end demand, but the market might not see high volatility.
