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(Interview Transcript)
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Ajay Mahajan
According to Mahajan, the Indian Rupee market historically has always been a one way market - when dollar rupee goes down, all exporters wants to hedge their receivable positions, not just for the year but also for the future contract which may have cash flows happening even in the second and the third year.
Mahajan said, “We had seen in the last one or two years that the dollar-rupee market saw a lot of export flows, while importers kept their positions completely open. In a momentum market like this, when you see the rupee slipping 0.40-0.50 paise a day, the exporters cancel their previously sold obligations, as well as importers come into rush into cover. So it’s not a balanced market at the moment. There is a bit of panic and I think most exporters would possibly be cancelling their positions.”
In CY08, he sees the dollar-rupee possibly sustaining this time, breaking through to Rs 42/USD levels to possibly attempting Rs 43/USD levels. He thinks that it will sustain at those levels for a while because Indian deficit is sharply wider this year with crude at USD 122/bbl. It is possibly headed higher, he added.
Agum Gupta, Head of FX of Standard Chartered Bank feels that at the moment, the rupee-dollar move has already been very sharp and the market will probably consolidate a bit here. “But in the short-term to medium-term, we need the RBI to give some signal or to supply some dollar for the sentimental change,” he added.
Gupta feels that today’s close will be crucial. “Any close above 41.70/USD will be bearish for the Rupee because it’s a technical point on the charts. So if the Rupee closes above 41.70/USD, we will move towards Rs 42/USD level very soon and between Rs 41.70/USD and Rs 42/USD; RBI should come into supply some dollars; otherwise the mood will be very bearish out there,” he said.
Meanwhile, Managing Director and CEO, ICICI Bank, KV Kamath has said that the rupee is down as capital flows are not strong, reports Newswire18. He said that there’s a need to 'wait & watch’ the rupee/dollar movement. Kamath feels that the US dollar is up globally on better
The Rupee fell a further one percent, ending at 41.77 to the dollar, compared with its Wednesday close of 41.36/USD.
In the past three days, since May 5 that is, the dollar has gained by nearly 3 percent. Kamath says that dollar flows into the stock markets would be one of the main triggers for the currency in the short term.
"The whole issue of where the rupee moves will depend on our own strength in terms of how the economy is doing and export-import balances and inflows, flows are little slack contributing to weakening rupee," he said.
The Commerce Secretary has said that the weakening rupee is good for exports, reports Newswire18. He has called for the review of export sops if the rupee stays unchanged for three months. He sees the rupee fluctuating in the current fiscal. The Commerce Secretary said that it is too early to see the weak rupee impacting export aim.
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