The recent weakness in capital flows amidst souring of sentiments towards emerging markets is a source of weakness for the currency". Moreover, some deterioration in both the current and capital account in 2017 is also likely, the note said."While in the near-term, US weak Dollar policy can create some downside pressure on dollar/rupee, we believe that fundamental pressure on dollar/rupee remains on upside and we see dollar/rupee heading towards China Gas Safety Device Pressure Gauge Factory level of 72-73," Edelweiss Securities said in a research note.The report noted that rupee will not be able to escape global USD rally and receding Dollar liquidity..It further said that "strong surge in capital inflows post-Modi election euphoria was a key reason for the outperformance in rupee.However, the relative appreciation of the rupee is taking a toll through weak exports with Indias underperformance in global exports.95 against the US dollar.The Indian rupee has been one of the best performing emerging market currency in the last few years resulting in significant outperformance of around 15 per cent against emerging market basket and about 12 per cent in REER terms in the last three years."With half of the term of PM Modi over, investors would be bracing for a risk of gradual move towards populism, especially on the wake of demonetisation and state elections," the report said."This was on the back of fortuitous circumstances of decline in commodity prices resulting in lower imports and healthy capital inflows post Modi victory amidst benign global liquidity," the report said.The fundamental pressure on dollar/rupee is on upside and the pair is heading towards a level of 72-73 by December-end this year, says an Edelweiss Securities report."While we remain optimistic on Indias growth story and macro fundamentals; we believe that rupee over-valuation, rising commodity prices and growing protectionism amidst weakness in exports is likely to put pressure on rupee," the report said. The rupee is currently hovering at 66.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

In Asia, all leading bourses witnessed mild to heavy sell-offs on Tuesday after US-China trade war further intensified.53, gaining 227.The Tuesdays trade, mainly the first half of the session, was marked by intense volatility as investors appeared cautious weighing a host of headwinds like concerns on EN3 Certified Gauges Factory macro-economic front, US-China trade war tensions and uncertainty over election outcome.66 per cent higher.65 and touched a high of 11,294.73 points and the Nifty has given away nearly 600 points.In percentage terms, however, Sun Pharma topped the chart with 5.10.82.38 against the US dollar in intra-day.Meanwhile, the Indian rupee staged a mild recovery, trading 13 paise higher at 70. Other major gainers include Bharti Airtel, Vedanta, Indusind Bank, SBI and RIL -- rising as much as 5.70 and a low of 36,956.The gauge started off the session on a slightly positive note at 37,146.75 and low of 11,108. It finally settled the day at 37,318. Intra-day, the index touched a high of 37,572.Sensex heavyweights Reliance Industries, ITC and SBI were mainly responsible for the recovery.71 points or 0.30 during the session.87 per cent.40 per cent.On Monday, Indian bourses had registered losses for the ninth consecutive session.61 per cent.85 points or 0. It finally ended at 11,222.05, 73.On the flip side, TCS, HCL Tech, Bjaja Finance, Bajaj Auto and Infosys were among the top losers on the 30-share index..94 per cent, on concerns about supply disruptions in view of geo-political tensions in the crucial oil producing region of the Middle East.Similarly, the NSE gauge Nifty opened higher at 11,151.Mumbai: Indian equities on Tuesday reversed their nine-session losing streak, with the BSE Sensex recovering over 227 points and the NSE Nifty regaining nearly 74 points, helped by gains in pharma, banking and energy stocks.58 against the previous close of 37,090.The escalating trade war between the US and China is causing more market volatility around the world.Brent Futures, global crude oil benchmark, traded higher at USD 70.In a retaliatory move, China on Monday said it would raise tariffs on US goods worth nearly USD 60 billion.In the last nine sessions, the Sensex had lost 1,940