Mumbai: After crossing the 57 mark against the US dollar last week, the domestic currency is likely to remain under pressure in the near-term on the back of rising concerns over the current account deficit.
"Rupee will remain under pressure in the near-term as the fundamentals are weak due to high current account deficit and trade deficit," Head of Treasury of IDBI Bank N S Venkatesh told PTI over the weekend.
He also said the recent depreciation in the rupee was mainly due to apprehension by market participants regarding tapering of stimulus given by the US central bank.
Last week, the rupee closed below the key 57-mark against the US dollar for the first time in a year sliding by 22 paise to 57.06 amidst high CAD, which is likely to be around 5 percent for FY13.
The domestic currency had lost around 5.6 percent since May, 2013 after the Federal Reserve had hinted at tapering of stimulus given by it.
Referring to this issue, Chief Currency Strategist of Geojit Comtrade Hemal Doshi said the rupee would be under pressure till it crossed 56.70 in the near-term.
"Rupee will see some stabilisation after it crosses 56.70 on technical side. However, the market remains in a bearish mode at present," Doshi said.
However, some of the treasury officials are also hopeful that rupee at 57 level will prompt remittances flowing to the country along with dollar selling by exporters.
"I hope that higher remittances will come into the country at these levels. Even, exporters may sell dollar in this kind of attractive levels," Venkatesh said.
Last week, Deutsche Bank in a report said the fall in the domestic currency is temporary and is likely to bounce back in second half of 2013.
"We are not inclined to worry a great deal about the rupee's near or medium term outlook..., the major sources of drag to the currency in recent years - high inflation and high current account deficit - are dissipating rapidly, and will help support the currency," it said in a note.
Meanwhile, the Reserve Bank governor had said that the central bank would not intervene in the forex market to support rupee saying, "A fair defence of the exchange rate can be worse than no defence."