Lower oil prices to counter Omicron fears; yet rupee to remain subdued

Concerns over new Covid-19 variant Omicron, as well as continued foreign fund outflows, will keep Indian rupee subdued during the upcoming week.

Besides, rising trade deficit along with fears of US tapering measures are likely to hamper any appreciation move.

However, the downside will be capped by lower oil prices.

“Rising trade deficit and taper had it’s toll on rupee. Continuos FPI pull out from equities has been countered by IPO inflows so far, and may continue for some more time,” said Sajal Gupta, Head, Forex and Rates, at Edelweiss Securities.

“The Omicron variant is also a problem less discovered. This would take time to decipher. However, India should benefit from its large vaccinated population,” he added.