Kshitij.com sees $ coming down to Rs 44.50

In an interview with CNBC-TV18's Latha Venkatesh, Vikram Murarka, Chief Currency Strategist at Kshitij.com spoke about the globally weakening dollar and the risks that are arising in the currency market.

Below is the verbatim transcript of the interview. Also watch the accompanying video.

Q: At the moment, we are seeing dollar weakness globally and return of risk appetite as the old theme were. In the very near-term, how would you play the dollar for the month or the next two months?

A: In the near-term of about two-four weeks, we will remain in the range of Rs 44.80 on the downside and Rs 45.60 on the upside. Thereafter, over the next couple of months, we could see the dollar come down towards about Rs 44.50. In the immediate scenario or timeframe of two weeks or two months, it would make sense to sell the dollar while we are below Rs 45.60.

Q: January to March quarter would see dollar index inflows. We are facing some kind of headwinds for the rupee. One is not seeing the FIIs bringing in the green back as well as crude is also inching higher. Therefore, what is the possibility of trade deficit getting bad although, the December numbers were good? Could the dollar get as cheap as Rs 44.50 and find some headwinds?

A: Globally, the dollar could get a little weaker over the next few weeks. The dollar index has room to come down to 77.5. This is against the general market expectation. The euro could possibly head up to 1.36 and the pound could get stronger till 1.63. This is a macro picture as we might not be looking at this side. Apart from that, we have resistance for crude at Rs 92-93 per bbl. It would not be surprising to see crude come down a bit again.

The trade deficit numbers in December was only Rs 2.6 billion against an average of about USD 10.6-10.7 billion till August. We have seen trade deficit numbers narrow down in a trend fashion from September onwards. So, the December narrow number of USD 2.6 billion might not necessarily be an aberration. Possibly, the current account deficit might be a little lower than what has been priced in by the market.