An expected slowdown in the rate of foreign fund inflows along with the upcoming Q2FY21 GDP figures is expected to weaken the Indian rupee during the coming week.
Besides, expectations on a further stimulus has fanned fears of higher Government borrowings.
Nonetheless, rising virus infection in the US amid hopes of more stimulus is expected to keep the US dollar subdued.
Consequently, the rupee is projected to range between 73.70 to 74.50 per greenback.
“Flows into equity markets have been robust and supported the rupee,” said Sajal Gupta, Head, Forex and Rates, Edelweiss Securities.
As per estimates, more than Rs 25,000 crore have flown into the country’s stock markets till now during November.
“However, we expect the flows to slow down going forward and that can put some pressure on rupee and rising imports owing to normalisation can also keep strong rupee in check.”
Last week, rupee appreciated to 74.11 levels but saw strong support at 74 handle.
Nonetheless, dollar purchases from RBI as reflected in the forex reserve capped further appreciation.On Friday, official data showed that India’s foreign exchange reserves rose $4.277 billion during the week ended November 13.
Accordingly, the reserves increased to $572.771 billion from $568.494 billion reported for the week ended November 6.
