Concerns about the new Covid-19 variant Omicron, as well as ongoing foreign fund outflows, will keep the Indian rupee under pressure in the coming week.
Furthermore, rising trade deficits, as well as concerns about US tapering measures, are likely to stymie any appreciation move.
"Rupee traders are focusing on movement of dollar index, crude oil, fund inflows and news flow on the new stain of the virus, which will be crucial for directional trade," said Devarsh Vakil, Deputy Head of Retail Research, HDFC Securities
He cited that forex market is likely to remain turbulent in the week ahead. "The rupee is expected to remain within the range of 74.70 to 75.70," he said.
According to Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services: "Next week, market participants will be keeping an eye on the RBI policy statement and expectation is that the central bank could start the process of normalising policy amid signs of higher inflation by lifting the reverse repo rate from its current record low of 3.35 per cent.
Lower oil prices, on the other hand, will keep the downside to a minimum. "The rupee has suffered as a result of the rising trade deficit and the taper. FPI outflows from equities have been offset by IPO inflows so far, and this may continue for some time "Sajal Gupta, Head of Forex and Rates at Edelweiss Securities, commented.
"Rupee traders are paying close attention to the movement of the dollar index, crude oil, fund inflows, and news flow on the virus's new stain, which will be critical for directional trade," Vakil added.
He predicted that the forex market would remain volatile in the coming week.
"The rupee is expected to remain in the 74.70 to 75.70 range," he said.
"Next week, market participants will be keeping an eye on the RBI policy statement," says Gaurang Somaiya, Forex & Bullion Analyst at Motilal Oswal Financial Services, "and expectation is that the central bank could start the process of normalising policy amid signs of higher inflation by raising the reverse repo rate from its current record low of 3.35 per cent."