The expected return of foreign capital into India's keyindices will strengthen the Indian rupee further during the upcoming week.
Accordingly, the rupee is likely to touch the 74 to a USDmark during this period.
The FIIs have been on a selling spree in India's equitymarket, however, the rate of off-load has significantly come down during thelast few sessions.
On last Thursday, during the hour-long 'Muhurat TradeSession', FIIs sold just Rs 328.11 crore worth of stocks on the BSE, NSE andMSEI in the capital market segment.
"Rupee closed strong in this short trade week at74.50 to a USD on back of lower crude and IPO inflows. Also on the back ofIMF's suggestion of lower interventions to India's Central bank," saidSajal Gupta, Head, Forex and Rates at Edelweiss Securities.
"The US yields also softened a bit after touching1.70 levels paving way for a rally in risk assets. Rupee is expected to test 74levels this week and the Nifty is likely to gain further strength."
According to Devarsh Vakil, Deputy Head of RetailResearch, HDFC Securities: "This week rupee behaved exactly as expectedand appreciated amid heavy FPI flows from ongoing IPOs. Better PMI numbers ofmanufacturing and service activities indicating economic conditions areimproving."
"We now expect the Rupee to consolidate its recentgains and also factor in the important announcement of tapering from the USFOMC this week. We continue to remain rupee bulls, and we expect it toappreciate towards the 73.5-mark over the course of the next few weeks."
On the other hand, Gaurang Somaiya, Forex & BullionAnalyst, Motilal Oswal Financial Services said: "Domestic factors continueto be in favour of the rupee as a number of IPOs are attracting fund flows andthereby supporting the currency. Inflation and industrial production too willbe in focus on the domestic front."
"Rise in inflation is likely to trigger volatilityfor the currency as well as 10-year yields. We expect the momentum for therupee would continue to remain positive and it could quote in the range of74.20 and 75.20."
In addition, the currency desk of Emkay Global FinancialServices: "This week was a short week with USDINR spot witnessing adowntrend on IPO subscriptions."
"But we can brace for a heightened volatility nextweek after the FOMC, BOE monetary policy decisions, OPEC meeting and US NFPdata."