Unabated overseas fund flows into domestic equities coupled with prevailing high interest rate regime could result in a massive surge in rupee value against the US dollar and the local currency may touch the 39-mark by December, say experts.
This will hit the exporters hard, whose incomes have shrunk considerably due to a nearly 12 per cent rise in rupee value in recent months.
Heavy fund inflows, which have crossed $17 billion from March till mid October, would lead to further appreciation of rupee, they said.
"The rupee will go beyond 39.30 in the next two months as it is under immense pressure due to capital inflows which is expected to cross the $25 billion by FY 08," Canara Bank's senior forex