Jan 21, 2016 03:01 PM IST | Source: CNBC-TV18

'Yen can go down to 112 per $; Re will face resistance at 68.50'

Bhaskar Panda, senior regional head, treasury advisory, HDFC Bank, gives his view on where the yen as well as the rupee can head from here

Bhaskar Panda, senior regional head, treasury advisory, HDFC Bank, gives his view on where the yen as well as the rupee can head from here.

Below is the verbatim transcript of Bhaskar Panda’s interview with Anuj Singhal and Ekta Batra on CNBC-TV18.

Ekta: Wanted to ask you about the yen in particular. It has appreciated around 2.5-3 percent odd already year-to-date (YTD), how much more do you think it can appreciate?

A: I think it might go down further towards 112 per dollar, maybe I am not in agreement with most of the markets but my view is that if you look at the daily graph or even weekly graph, a kind of top has formed around 120-122 per dollar kind of thing. The retracement has started and if you look at even fair valuation, yen is undervalued and yen has lost a lot of value against dollar in 2015.

So, therefore, to go back to normalcy probably and in relation to what is going to happen in CNY, I feel that it is going towards 114.80 per dollar if I remember correctly and after that 112 per dollar is something which I am looking forward to.

Anuj: What about the dollar-rupee, is the previous low a matter of time only now and what next from here?

A: If you look at dollar-rupee graph, it has been in a trend of depreciation since 2014 April. It has been in a trend channel since then if you look at highs and lows and every week the highs and lows have made new highs. Now, today if you are asking me where it is going, 68.80-68.85 per dollar is something which is a possibility. Everybody is giving a call for 70-72 per dollar. I don’t believe that it is going to be there at 70-72 per dollar at this point of time.

If you look at that trend channel, there is a resistance coming in at 68.50 per dollar so if that breaks then only you can look at a new level. I don’t think there is condition right now, obviously there is fear in the markets everywhere. Apart from that I think it should remain in that channel and should move in an orderly manner. I have seen that central bank is actually keeping a watch on the developments and I think they will do necessary things to make it an orderly devaluation.

Ekta: If you are not expecting 70-72 per dollar on the rupee, when are you expecting maybe that 68.80-68.85 per dollar that you had alluded to and then would that be at the upper end of the range?

A: I think so; that upper end of the range, yes, I don’t think it is going to go beyond that. Timeline, it is very difficult to predict at this point of time. However, the way it is going probably you can see it maybe next week but I don’t feel or I don’t necessarily agree that it will go to 68.85 per dollar next week. I feel that there is a lot of resistance coming in.

I have not seen much of exporter selling as of now but I think we see some action coming in whenever it goes beyond a point.  So, it will be orderly depreciation, not really moving to 70-72 per dollar given the fundamentals that we are in a better spot than other currencies or other emerging markets as well.

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