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Rupee Outlook

• The US dollar declined 0.04% on Friday amid signs that Omicron variant would not significantly derail a global economic recovery. Further, US equity and treasury markets remained closed for holidays. However, sharp downside was cushioned as core PCE price index reflected elevated inflation

• Rupee future maturing on December 29 appreciated by 0.28% as worries over effect of new variant on global economic recovery faded. However, further gains were prevented on FII outflows and surge in crude oil prices

• The rupee is expected to appreciate on weakness in dollar and rise in risk appetite in the global markets. Market sentiments improved on ebbing concerns over severity of Omicron variant, fuelling hopes that governments across the globe may not need to widen restrictions. However, sharp gains may be capped on a surge in crude oil prices and consistent FII outflows. US$INR (December) is expected to trade in a range of 74.80-75.25

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