Mumbai :Domestic rating agency India Ratings today said it expects the rupee to appreciate to the 64.5 level this week on expectations of a rally in the emerging market currencies.
“We expect a ‘risk-on’ rally globally to support emerging market currencies this week. The rupee, after trading in a narrow band of Rs 64.73-65.22 against the dollar last week, is likely to appreciate and inch closer to 64.5 to the dollar,” it said in a note.
It, however, said the fragile corporate recovery and expectations of a rebound in commodity prices in the near-term will be constraining factors for the currency.
The report further said that when compared with its Asian peers, the rupee will under-perform as its depreciation this year has been smaller.
The rupee depreciated by 16 paise to 64.99 against the US currency in early trade today due to strong demand of dollar among importers. The rupee had closed at 64.83 against the dollar at the forex market last Friday.
Dealers attributed the rupee’s fall to increased demand for the US currency from importers. However, a higher opening in the domestic equity markets capped the losses.
The agency said the US Fed is likely to maintain rates, but noted that the continuing uncertainty on communique regarding the timing of hike and its trajectory would continue to be harmful for the markets over the long term.