Mumbai, Dec 26 Fresh FIIs' inflows for upcoming IPOs as well as lower crude oil prices are expected to strengthen the Indian rupee during the upcoming week.
However, concerns over Covid-19 variant Omicron will keep the Indian rupee's strength in check.
"Last week of December is strong for rupee and Indian equities on a last 10-year track record," said Sajal Gupta, Head, Forex and Rates at Edelweiss Securities.
"Oil prices are expected to be below $80 per barrel in near future on a slow down in demand on back of Omicron re-emergence. Possibility of bond index inclusion and IPO flows shall be helpful."
Last week, the rupee covered lost ground on the back of decisive intervention by the RBI and slowed FPI redemption in Indian equities.
Gupta expects Indian rupee to test 74.50 this week on a strong note.
Rupee had closed at Rs 75.03 to a USD on Friday after a strong show.
"On the domestic front, investors will be keeping an eye on the fiscal balance number and increased expenditure could restrict sharp appreciation for the rupee," said Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services.
"FII participation has been subdued in the last few sessions, but increased inflow as we get into the New Year could further support the currency."
Market participants are expected to track macro-data such as the Index of ECI
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