Aug 06, 2013, 11.42 AM | Source: CNBC-TV18
Rupee has breached its previous low of 61.21/USD and is now in an uncharted territory, says Arvind Narayanan of DBS.
Arvind Narayanan (more)
Head of Sales, Treasury & Markets, |
The Reserve Bank of India (RBI) which recently announced a slew of liquidity measures to protect the rupee may at last resort to hiking rates if rupee hits the 62 mark, he added.
Below is the edited transcript of Arvind Narayanan’s interview with CNBC-TV18
Q: What has caused this pressure on the rupee this morning?
A: The last couple of days there have been underlying demand for the dollar. I would say it is actually genuine commercial demand. We are seeing buying coming from importers. So crucial is the fact that it has broken the previous high and all eyes are now on what happens next. It is an uncharted territory, it has gone above 61.21/USD. Sense is if this underlying demand continues it could move more towards 61.70-61.80/USD thereabouts.
Q: Are there any signs of intervention from the central bank or so far they have stayed away?
A: They are not going to really intervene at specific spot levels. Probably they will try and temper the volatility. I remember the statement which they made last time, they said if rupee crossed 61-62 per dollar, they mentioned the possibility of a repo or CRR hike is definitely a possibility now. Thus liquidity conditions have eased a bit and hence a rate hike definitely looks a possibility. I would look out for some signs on that side.