Rupee may trade between 52-49.50 in short term:IIFL

MUMBAI - Of late, Indian rupee has been on a constant downward spiral, adversely impacted by the ongoing European debt crisis. During the past few weeks, Indian rupee has depreciated from 49 at the beginning of this month to 51.40 levels till date.

A stronger US dollar and surging bond yields in Europe have compelled global investors to liquidate positions in asset classes including equities and commodities. Italian and Spanish 10-year bond yields have soared above unsustainable levels of 7%, while yields on bonds issued by France, Austria and Germany have also climbed.

It seems to be a precarious scenario, where financial liquidity in Europe has dried up. Effectively, weaker Indian equity markets have led to FII outflows, drastically exerting downward pressure on INR.

Hitesh Jain, Commodity Analyst – Metals & Currency, IIFL

On outlook front, INR has the potential to test the 2009 low of 52.20 and thereafter trade range bound within 52-49.5 for the short run.