Rupee Likely To Strengthen Further.

The Indian rupee is expected to strengthen further in the coming week aided by the narrowing of country's current account deficit and the sustained inflows of funds into the domestic markets. The fund inflows are likely to continue on expectations that India would sustain its economic growth trajectory.

The government forecast of 9.25% growth in the current fiscal has helped boost sentiments among overseas investors about the domestic stock markets. The fund flows would also help cushion the impact of high oil prices on the rupee. The increasing oil prices are, nevertheless, a major area of concern, which could swing the direction of the rupee, given the negative impact of high oil prices on inflation and fiscal deficit.

The rupee is likely to get additional support from the further weakening of the US dollar. The depreciation in the greenback as an aftermath of the quantitative easing has been a major reason for a stronger rupee. The dollar is likely to decline further as markets react to the eurozone interest rate hike in the coming week, the first of the several anticipated increases over the course of the year.

Moreover, going by the indications from the Federal Reserve, the central bank is likely to continue with its loose monetary policy despite improvements in the jobs scenario. Technical levels for the USD/ INR: We expect the rupee to appreciate in the coming week. Support 43.88/43.25 and resistance: 44.80/45.10

Source : economictimes.indiatimes.com