RVS Sridhar, Senior Vice President Treasury, Axis Bank, said it would convey too much of negativity to the market if the dollar-rupee were to fly off the Rs 43 per dollar level. He added that 10-year bond auctions could come in later.

Excerpts from CNBC-Tv18’s exclusive interview with RVS Sridhar:

Q: There wasn’t any sign of Reserve Bank of India intervention, but do you think RBI will be back to protect Rs 43 per dollar levels?

A: Yes, we think so.

Q: Do you see any evidence of some concerted, motivated dollar supplies?

A: I don’t think this is prominent at this point in time. At this level, the rupee came off last time. We think this level will be protected at another time. It would convey too much negativity to the market if the dollar-rupee were to fly off the Rs 43 per dollar level.

Q: Trading has been very thin on the 10-year bond. What are the fears in the market? Could there be an extra bond auction in July itself?

A: I don’t think the government has displayed any such signs. Even last year, they had stuck to that. The concern is that the fiscal deficit is expected to slip a bit, which is not right. The slippage will come later, not immediately. So, bond auctions could come in later as bringing them now would actually fuel the whole thing further.

Q: What are you expecting on the 10-year bond by the time the auction comes in? Are you expecting 9% to be pierced at all or do you think it will stop at 8.80% levels?

A: We would think 8.85% is where the auction cut-off should come at. I don’t think we are still at 9%.

Q: For the rest of the year, what kind of highs are you factoring in for the yields under current circumstances?

A: I was looking for a lower level, but think 9% on the 10-year is now more or less given. When we have new auctions, lack of demand will pull yields higher unless RBI were to come in and dictate a certain yield to the market.