Rupee capped below Rs 50/$ level for near-term: IndusInd Bk

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Rupee capped below Rs 50/$ level for near-term: IndusInd Bk

Moses Harding of IndusInd Bank spoke to CNBC-TV18 about the push seen on the rupee-front today.

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Excerpts from Midcap Radar on CNBC-TV18 Watch the full show » IndusInd Bank BSE | NSE 01/06/12 Are Mutual Funds betting on IndusInd Bank?

Moses Harding of IndusInd Bank spoke to CNBC-TV18 about the push seen on the rupee-front today. He says that there were many factors that were positive for the currency today. "First it started with the Forex Strictures, then the FII and NRI flows into debt and equity market, and very high premium keeping the forward market in supply driven mode," he says.

Below is the edited transcript of the interview.

Q: What accounts for this strength in the rupee today, who is bringing in and selling all those dollars?

A: There has been a combination of positive factors in favour of rupee. First it started with the Forex Strictures, then the FII and NRI flows into debt and equity market, and very high premium keeping the forward market in supply driven mode. So the combination of supplies both in the cash and forward market was driving the rupee one way.

RBI was expected to shift to dollar buy-mode in order to arrest extended gains and also to pump rupee into the system. But in the absence of RBI, I think it is kind of one-way move.

The cancellation restriction is also preventing exporters who have sold at higher level now coming back to profit booking.

Q: Anything specific today that has seen the rupee jump?

A: Now the comfort is that rupee is not going to go above 50 in the near term. So all exporters are selling. And equity flows are good, NRI flows are good. I don't see any demand in the market at this stage. So that is why you are seeing a supply driven-mode. The expectation is that if rupee is allowed to strengthen further, probably it will be good news for inflation. That can drive inflation below 6-7% and that is why RBI seems to be on sidelines.