India: Rupee likely to weaken further.

BANGALORE, Jan. 4. THE rupee is likely to weaken further and could test the Rs 47 to a dollar barrier as a fallout of the 50 basis point reduction in the US Federal Reserve Bank's discount rate (Fed rate), banking sources said here.

Banking sources said here this was likely on account of the anticipation of a large-scale exit by foreign institutional investors to take advantage of the US equity markets. US equity markets have instantaneously reacted to the announcement.

But forward premiums are also likely to widen further on the basis of pure interest rate differentials alone and also the return differentials.

Currently, the six month forward …