The rupee opened today at over one-year high at 65.40 per dollar, a gain of 29 paise versus previous close of 65.69. On Wednesday, the rupee had closed at a 16-month high.
The rupee Thursday opened at over one-year high at 65.40 per dollar, a gain of 29 paise versus previous close of 65.69. On Wednesday, the rupee had closed at a 16-month high.
The recent elections have been definitely positive for the rupee, said Iren Cheung of ANZ Research. At some point, she expects the Reserve Bank of India (RBI) to absorb the flows coming into India, which will support the dollar-INR.
“If capital flows continue to be coming to India, we could see that 65/dollar handle breaking because we are not very far from there,” she said.
Next support level is at 65 per dollar.
Below is the verbatim transcript of Irene Cheung’s interview to Latha Venkatesh and Sonia Shenoy on CNBC-TV18.
Sonia: The rupee strength has come as a bit of a surprise to most, currently trading at above 65/dollar – 65.26/dollar, what is your own view on how the dollar-rupee equation could pan out over the next two to three months?
A: I think the election definitely has been positive for the currency and we have seen very big move in the rupee. However, we would expect at some point perhaps the central bank will absorb some of the flows into India, the capital flows, hence supporting dollar-INR. However, that remains to be seen.
Of course the overnight move in the US dollar which is weakening after the central bank delivered 25 basis point hike, but did not change its tightening path has weakened the dollar. So, from that perspective, continues to put downward pressure on dollar-INR.
Latha: Do you think the dollar gets cheaper than 65/dollar?
A: We will be looking at that possibility because that has broken the support level at about 66.2/dollar, and if capital flows continue to be coming in India, we could see that 65/dollar handle breaking because we are not very far from there.The next support level that we are looking is about 65/dollar to slightly below 65/dollar. So, I think that is surely a possibility in the absence of any official action in the market.