Expect volatility in rupee to continue till June 17: BoA

In an interview to CNBC-TV18, Jayesh Mehta, managing director & country treasurer, Bank of America talks about the rupee’s movement and where the Indian currency is headed from hereon.

Below is an edited transcript of his interview. Watch the accompanying video for more.

Q: What is causing the weakness in the rupee today?

A: We all know that global factors are involved but today, one can attribute it to the currency future maturity which would be settling today. So some of the buying we would attribute to currency futures settlements. So maybe once the fixing happens we may see some churn around there on the weakness today which we saw in the morning.

Q: Do you think 56.30-56.40 is the low for the moment because it pulled back quite sharply from there?

A: Today’s thing I would attribute more to the currency future but from now to June 17, we would see a range of 55-56 and maybe put 50 paisa on both side if one has to give a wider range. We are seeing RBI intervening but it is not an all out effort, which is rightly so because if at this juncture you go on an all out effort and there is something dramatic coming out of Greece, you would rather do it at that point of time once the Greece thing settles. That is our thought process currently on the rupee. So live day to day until June 17 and then let us see what happens.

Q: What are your own expectations in terms of how much near-term pressure the euro may see and what collateral damage rupee may have to face because of it?

A: The whole global situation is like a risk-on, risk-off looking at the euro and that kind of environment will continue till the elections happen on June 17. So it is not predictable because right now it is just following global cues and to an extent the RBI keeps on intervening a little bit but it is more to be a speed breaker and not a complete all out effort to do a reversal.

Q: Once the expiry is done how much relief are people playing for on the rupee?

A: No much. Maybe once the fixing happens it can retrace back another 20-30 paisa from that level. That is what we expect during the today but we have to see. It is a volatile market and not easy to predict. But it looks like we will see the peak near fixing and once the fixing happens maybe it would retrace back by another 20-30 paisa. Now, what is the peak whether it is 64 or 84 or 56, I don’t know.