Agum Gupta, Head - Forex at Standard Chartered Bank said the rupee is on a slightly appreciating bias right now. RBI is going to hold it steady at current levels for the near future, he said. He expects a CRR hike to be announced anytime soon. He sees the rupee in the band of 39.75-40.25.

Excerpts from CNBC-TV18's exclusive interview with Agum Gupta: 

Q: Give us an idea of where do you think the rupee is headed given the slender amount of strength we have seen coming in over the last couple of weeks?

A:  We are seeing some restoration of confidence in the rupee right now and the rupee is on a slightly appreciating bias right now. The only reason it’s not appreciating is because of reasonable amount of intervention from Reserve Bank of India (RBI), they are buying dollars and selling rupees.

Q: Going ahead, what is your expectation from RBI given the inflation figure that they are faced with?

A: The conventional expectation in the market is that RBI will allow INR to be slightly stronger than it would have otherwise, but the fact is that at the moment they are not doing that and they are holding it in a very steady range. It looks like they are going to hold it steady at current levels for the near future.

Q: We have already seen Rs 5,000 crore MSS announced for April 10, do you see expect anything by way of policy action that could significantly impact the bond markets and the 10-year yield from here on?

A: The RBI has been adding a lot of liquidity to the system, so expectation of CRR hike is definitely there in the market and it could happen anytime between now and the credit policy or in the credit policy.

Q: If you do get the CRR hike, how do you expect the 10-year (bond) to respond to that?

A: We expect the 10-year to see a mild upmove from current levels on the back of that. But if it's only a CRR hike, which is there to impound the surplus liquidity in the system, then it won’t have any impact on the rates.

Q: Would the band be 39.75-40 or would it be shorter than that?

A: The band I would expect to be 39.75-40.25.