With foreign inflows beginning to dry up and global uncertainties persisting, the rupee is poised for further depreciation against the dollar, say analysts. Other contributing factors: high oil prices and continued fears of capital outflows.

Analysts are broadly in agreement that the rupee would be within the range of 40.00 to 40.75 levels against dollar for the next two months. ?The market is seeing a drying up of foreign inflows leading to depreciation of the rupee. We are looking at the rupee hovering at 40-40.5 levels in the short term,? said Ajay Mahajan, group president of financial markets, institutions & investment management with YES Bank.

V Rajagopal, chief forex dealer at Kotak Mahindra Bank, said, ?Stock markets are weak and there is a day-to-day shortage in dollar flows.? Rajagopal also expects the rupee?s weakening to continue in the short term. ?We think the rupee might touch 40.75 levels in the near term. Sentiment has been down since December-January,? he added.

On Wednesday, the domestic currency closed at 40.3050 a dollar, as against 40.3000 on Tuesday. It had touched an intra-day high of 40.20 and low of 40.36.

Apart from FII money drying up, oil companies are buying dollars, noting a fall in oil prices from its record highs of $103.95 a barrel. On Wednesday, crude oil traded on the New York Mercantile Exchange at $100.44 a barrel.

RBI intervention in the forex market to prevent further appreciation of the rupee has also helped to some extent. ?Having already allowed a large appreciation of 10.2% over the last 12 months, we believe that in the next three to four months, RBI is likely keep the rupee in a narrow band of 39.00 to 40.25 a dollar,? stated Chetan Ahya and Tanvee Gupta from Morgan Stanley in a research report.

Meanwhile, the government has said the ECB cap on dollar inflows was only ?temporary?. ?While the government might remove the restrictions imposed on ECBs, which may lead to dollar inflows to the country, there may not be a significant rally in the rupee,? Mahajan added.

TK Bhaumik, chief economist with Reliance Industries Ltd, on the other hand, feels quite the reverse and that removal of ECB curbs would lead to an appreciation of the rupee. ?However, the export sector needs to be watched, as it constitutes about 15% of our GDP,? said Bhaumik.