Rupee to continue its flight

The rupee is expected to move in a band of 43.30/60 per dollar this week.

Analysts said the local currency could appreciate till the Union Budget in February as foreign investors are betting on big-ticket reforms in the financial and telecommunications sectors.

Exporters are seen rushing to convert their dollar holdings and trying to maximise realisation of receivables in order to reduce losses due to the rupee's rise. This, in turn, could pump up the supply of greenbacks in the foreign exchange market.

But a forex trader said with the dollar showing signs of recovery, the leg-up for the rupee this week would come from foreign portfolio inflows. "But if the euro sees some correction against the dollar, the rupee, too, could follow suit," he added.

Meantime, forward premiums are forecast rangebound. They may decline on dollar sales by exporters and covering of payment obligations by importers. But they could rise if money market liquidity turns tight.

Recap: The rupee was volatile last week amid thin trades. Foreign exchange inflows and exporter receivables boosted it against the greenback. The sustained weakness of the dollar has benefited the rupee substantially.