The encouraging growth prospects of the Indian economy would result in continued stock market inflows. Rise in yield levels may prompt in-flows indebt markets as well.
Thus the trend of the rupee strengthening against global majors is likely to continue in the coming week. The rupee has already appreciated more than 3.5% against the dollar and about 10% against the euro during the last quarter.
The dollar could strengthen further in the coming days against other currencies due to risk aversion and global events.
The inflation has been a concern, which may prompt RBI to take further action in the coming policy statement.
However, with supply outlook for foodgrains improving worldwide, expectations of a good monsoon and a better crop this year will dampen the inflationary expectations.