According to the Edelweiss Forex rates annual currency outlook 2017, the outperformance of the rupee is unlikely to continue and US weak dollar policy can create some downside pressure on USD/INR in the near term.
The rupee managed to sidestep the early volatility after the RBI's monetary policy committee maintained a status quo on repo rate amid widespread expectations.
Forex market sentiment turned highly buoyant after Finance Minister Arun Jaitley announced a fiscal deficit target that was in line with estimates along with proposal to further liberalize FDI policy.
Expectations of an economically balanced Budget by sticking to its fiscal consolidation path which will give room for the Reserve Bank of India to cut key rates along with robust capital inflows predominantly weighed on the local unit, despite a massive selloff in equities.
Extremely bearish greenback overseas and robust capital inflows predominantly supported the domestic currency after a tepid start.
Total forex exposure of these top corporates as at end financial year 2015-16 stood at Rs 19.5 trillion - the aggregate hedge cover of which was 36 per cent, the report said.
Mr Trump's first news conference since the November 8 election contained no details on tax cuts and infrastructure spending, two factors that had fuelled the five-week rally in stocks and a selloff in global bond markets.
A spectacular run in domestic equities even failed to defend the currency's slide, a forex dealer said.
On Monday, the rupee had tumbled by over 25 paise to close at 68.21 against the US dollar on renewed worries over fall in the country's economic growth coupled with concerns regarding quarterly earnings due from this week.
Sustained capital outflows and dollar's strength against some other currencies overseas also weighed on the local unit but a higher opening in the domestic equity market limited the rupee's fall, forex dealers said.
Inflation rose in Germany and France, providing the euro zone's central bank with evidence its loose monetary policy is working, while Chinese data showed the fastest factory output growth in six years.
Bitcoin is a web-based "cryptocurrency" that has no central authority, relying instead on thousands of computers across the world that validate transactions and add new bitcoins to the system.
Besides, the dollar's gain against major world currencies and a weak trend at the domestic equity market also left its mark on the rupee.
The index rose about 7.1 per cent during the fourth quarter, more than half that gain coming since the November 8 US presidential election on expectations that President-elect Donald Trump's plan to boost fiscal stimulus would benefit the currency.
The yuan, which has reached an 8-1/2 year low, was on track to lose nearly 7 percent against the dollar in 2016.
A huge selloff in local equities amid sustained withdrawal of funds by FPIs in the wake of the US interest rate hike largely kept sentiment shaky.