Rupee presaged in 43.60-43.44 per dollar band

OUTLOOK/ Currency

The rupee is likely to move in a wide range of 43.60-43.44 against the dollar this week.

Dealers said foreign exchange outflows would continue as they foresee foreign funds booking profit in equities. They pulled out a total Rs 1,087 crore (Rs 90 crore from equities and Rs 998 crore from debt) on Thursday and Friday last week.

But they saw the funds pumping money into the local markets if the dollar declined against major currencies and the rupee.

Foreign portfolio funds, nevertheless, are expected to continue investing in emerging markets to balance their portfolios and hedge risks.

Analysts feel the US Federal Reserve's hawkish tone on the course of interest rate hikes, conveyed through the minutes of its December 14 meeting, would be detrimental to the nascent rebound in the US economy.

Pressure on forward dollars foreseen

Premiums on the forward dollar will be under pressure this week.

Banks are expected to buy dollars on hopes of a further decline in the rupee even as foreign institutional investors book profit and convert their earnings into greenbacks for remittance.

Meanwhile, importers are expected to rush to cover their payment obligations so as to avoid being left with a depreciating rupee.

Recap: The rupee slid against the greenback throughout last week following the dollar's appreciation against global currencies. The rise was fuelled after the US Fed hinted at aggressive interest rate hikes to tackle inflationary pressures in the US economy.