Rupee may slip to 69/$ by Jun on FII outlows, weak earnings: RBS

China's fourth quarter GDP growth of 6.8 percent is slightly short of expectations due to weak industrial and macro growth, says Sanjay Mathur, Head of Research, RBS.In an interview to CNBC-TV18, Mathur says the underlining trend largely remains sluggish and achieving the official growth target of 6.5 percent in 2016 will be challenging for the Chinese government.Mathur sees the rupee weakening to 69 to the dollar by June as Asian currencies continue to remain under-pressure despite the stability in the currency market.Even weak corporate earnings performance, foreign institutional investment outflows and fiscal consolidation nervousness regarding Budget are likely to put further pressure on the rupee, he says. Below is the verbatim transcript of Sanjay Mathur’s interview with Ekta Batra & Anuj Singhal on CNBC-TV18.Ekta: Your analysis on the China GDP overall?A: The fourth quarter GDP number 6.8 was slightly short of expectation. By component what I continue to see is services sector is holding up but at the same time industry remains fairly soft spot in the overall macro. Along with that we also had some high frequency data points for December which although find their way in to fourth quarter GDP numbers which gave a picture of an underlying trend which has remained one of sluggishness. All in all we can say that the official growth target for 2016 is 6.5 percent and that is kind of a challenge that number to meet under the current circumstances. Global trade, there is excess capacity in the industrials sector and the property sector so it is going to be challenging environment still.Ekta: Your sense in terms of may be where the rupee could go if in case you are looking at it? A: Yes, we are so I think we are looking at a handle of 69 per dollar by June. There are number of reasons for this. The first is that despite sort of the recent stability in global currency markets, Asian currencies do remain under pressure. In that context rupee does look quite overvalued. This is also been borne out in the export numbers – that is the first point. The second is that we also been in a situation where corporate earnings performance has been very weak. That could potentially lead to outflows. We already have seen some installments of that. Thirdly, as we get closer to the Budget, nervousness of about fiscal consolidation is only going to rise so there are quite a few headwinds right now for the rupee. Anuj: Going forward do you see the currency stabilising then here or do you see the previous all time lows being tested? A: You are referring to India rupee right?Anuj: Yes, the Indian rupee. A: I do think that we will see further weakness to 69 per dollar. I don’t think in immediate one or two weeks we may well see some stability but the broader trend is towards one of weakness.