<p>The Indian rupee is likely to hold in a tight range in the early part of 2023 but the worst is possibly behind it, said traders and analysts.</p>.<p>The local currency has hovered close to its lifetime lows through most of December, but investors said it was not a cause for concern as they pinned hopes on inflows into equities and debt in 2023, on a possible recession in global economies.</p>.<p>"In the next six months, the rupee should outperform, now that it has caught up with Asian peers," said Abhilash Koikkara, head of forex, Nuvama Professional Clients Group.</p>.<p>"Equity flows should come back, as a recession is likely in global economies but India should be shielded from it. Plus, an easing of commodity prices could help our trade deficit," he added.</p>.<p><strong>Also Read | <a href="https://www.deccanherald.com/business/business-news/equity-investors-turn-richer-by-rs-1636-lakh-crore-in-2022-1176428.html" target="_blank">Equity investors turn richer by Rs 16.36 lakh crore in 2022</a></strong></p>.<p>India's current account deficit widened to a more than nine-year high in the July-September quarter on the back of high commodity prices, which pushed up the trade deficit, data from the Reserve Bank of India (RBI) showed on Thursday.</p>.<p>And while global commodity prices and the US dollar retreated in the last quarter of 2022, the rupee failed to capitalise on it. Worsening external balances and concerns over a drop in exports weighed.</p>.<p>The rupee is set to end the year down nearly 11 per cent against the greenback, its worst annual performance since 2013.</p>.<p>Traders also flagged a cash dollar shortage in early December, with demand led by importers, corporates, and foreign investors possibly repatriating their holdings, as reasons for weakness in the domestic currency.</p>.<p>Most bankers and analysts predicted the rupee would trade in the 81.50-83.50 range in the first quarter of 2023, with the RBI intervening to prevent any sharp volatility while it also looks to rebuild its foreign exchange reserves.</p>.<p>Foreign investors have sold around $16.5 billion worth of equities so far in 2022 compared to net purchases of $3.76 billion in 2021. How the flows play out will be crucial to the rupee's fortunes in 2023.</p>.<p>"Equity inflows usually kick in, in January, but I think dollar demand will continue to far outpace the supply that's coming, so there may only be an initial appreciation," said Ritesh Agarwal, head of treasury at CTBC Bank.</p>.<p>How the COVID situation evolves in China and the rest of the world is a risk we need to watch out for carefully because that could again boost the dollar, he added, predicting the rupee could fall to the 84-levels early next year. ($1 = 82.7600 Indian rupees)</p>
<p>The Indian rupee is likely to hold in a tight range in the early part of 2023 but the worst is possibly behind it, said traders and analysts.</p>.<p>The local currency has hovered close to its lifetime lows through most of December, but investors said it was not a cause for concern as they pinned hopes on inflows into equities and debt in 2023, on a possible recession in global economies.</p>.<p>"In the next six months, the rupee should outperform, now that it has caught up with Asian peers," said Abhilash Koikkara, head of forex, Nuvama Professional Clients Group.</p>.<p>"Equity flows should come back, as a recession is likely in global economies but India should be shielded from it. Plus, an easing of commodity prices could help our trade deficit," he added.</p>.<p><strong>Also Read | <a href="https://www.deccanherald.com/business/business-news/equity-investors-turn-richer-by-rs-1636-lakh-crore-in-2022-1176428.html" target="_blank">Equity investors turn richer by Rs 16.36 lakh crore in 2022</a></strong></p>.<p>India's current account deficit widened to a more than nine-year high in the July-September quarter on the back of high commodity prices, which pushed up the trade deficit, data from the Reserve Bank of India (RBI) showed on Thursday.</p>.<p>And while global commodity prices and the US dollar retreated in the last quarter of 2022, the rupee failed to capitalise on it. Worsening external balances and concerns over a drop in exports weighed.</p>.<p>The rupee is set to end the year down nearly 11 per cent against the greenback, its worst annual performance since 2013.</p>.<p>Traders also flagged a cash dollar shortage in early December, with demand led by importers, corporates, and foreign investors possibly repatriating their holdings, as reasons for weakness in the domestic currency.</p>.<p>Most bankers and analysts predicted the rupee would trade in the 81.50-83.50 range in the first quarter of 2023, with the RBI intervening to prevent any sharp volatility while it also looks to rebuild its foreign exchange reserves.</p>.<p>Foreign investors have sold around $16.5 billion worth of equities so far in 2022 compared to net purchases of $3.76 billion in 2021. How the flows play out will be crucial to the rupee's fortunes in 2023.</p>.<p>"Equity inflows usually kick in, in January, but I think dollar demand will continue to far outpace the supply that's coming, so there may only be an initial appreciation," said Ritesh Agarwal, head of treasury at CTBC Bank.</p>.<p>How the COVID situation evolves in China and the rest of the world is a risk we need to watch out for carefully because that could again boost the dollar, he added, predicting the rupee could fall to the 84-levels early next year. ($1 = 82.7600 Indian rupees)</p>