Strong foreign fund inflows for domestic equity as well as bond markets are expected to strengthen the Indian rupee in the short run.

"Rupee has been in a tight range lately. In the previous week, the RBI bought US dollars worth approximately $6 billion to stem the rupee's appreciation," Sajal Gupta, Head, Forex and Rates, Edelweiss Securities, told IANS.

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"It is a matter of time that RBI's interventions weaken to allow rupee appreciation," he added.

Gupta expects the rupee to range between 73 and 73.50 with a risk of appreciation.

However, the upcoming US elections along with likely Brexit talks and heightened lockdown measures in Europe might dampen sentiments.

"With event risks like Brexit and US elections on the horizon, volatility is going to be on the cards," said Rahul Gupta, Head of Research-Currency, at Emkay Global Financial Services.

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"The USDINR ATM volatility has already shifted close to 7 percent from the 6 percent observed last month. Also, the negative risk sentiments are ushering flow back towards the safe-haven dollar. So in the coming sessions, we can observe some impulsive trading in USDINR and the pair may swing in between 72.75 and 73.75," he added.

According to Devarsh Vakil, Deputy Head of Retail Research at HDFC Securities: "The volatile last week ended with slightly optimistic note after US President Donald Trump announced that he would personally step in to get reluctant Senate Republicans on board for bi-partisan stimulus deal.

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"The risk-on sentiment (strengthening/ appreciation) is back on better than expected retail sales numbers and the continuation of Brexit talks." (IANS)