Rupee may weaken to 42/$ by 08 end: StanChart

Sundeep Bhandari, Regional Head, Global Market South Asia, Standard Chartered Bank feels that in the short term, the rupee may trade in the range of Rs 39.8-40.1. However, his long term view is that the rupee will weaken and perhaps end the year at 42 per dollar. He believes the RBI is most likely to resort to a 50 bps CRR hike instead of an interest rate hike.

Excerpts of CNBC-TV18’s exclusive interview with Sundeep Bhandari:

Q: The rupee has held to Rs 40 for a better part of the last few days. What’s your own expectation with all that’s happening around inflation, a possible policy action on how the rupee may behave?

A: In the short term, the rupee may trade in the range of Rs 39.8 and Rs 40.1. In the longer term, we still see rupee weakening perhaps ending the year at 42 per dollar level. It’s right to say that inflation remains a concern. Market talks abound that the RBI will let the rupee appreciate to off set inflation.

Q: Give us an idea of how are you reading signals on the bond side and what they are expecting the RBI to do because the market is still out in opinion on whether we could see status quo or we might actually see a rate increase between 25-50 basis points?