Rupee likely to move in 49.00-49.80 range

The Indian rupee was seen trading in a tight range making the high of 49.54 and low of 49.12 levels last week.

The rupee-dollar pair is unable to maintain strength above 49.75 despite some strength in dollar internationally since Indian equities continue to receive heavy inflows.

Since the beginning of the year, foreign institutional investors ( FIIs) have pumped in more than $7 billion in local markets.

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The pair also seems to be pressured down due to RBI selling seen close to 49.60 plus levels during the late trading hours. The local unit should soon witness some weakness towards 50, as the continuous increase in the crude prices will severely effect our current account deficit which is already expected to be at 3.5% of GDP by March 2012, the worst in the last eight years.

The euro may also head lower with the dollar index heading higher towards 80-80.50 since the decision on the Greece bailout is getting extended every time, making the markets nervous.

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The German parliament still needs to vote on the second bailout on February 27, which will be then followed by a Euro summit on March 2.

Additionally, flows of this magnitude in the local markets do not seem sustainable on a month on month basis. The rupee is expected to be in the range of 49.00-49.80 for the week, with a strong support seen at 49.15 levels and resistance at 49.75 levels.

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Exporters are suggested to cover medium-term exports to dips close to 49.80-50.00 levels and higher, and importers cover short term near 49.10 or below.