Rupee may see 62/$ before new RBI measures: Macquarie

Market's reaction to dovish Reserve Bank of India comments in its June monetary policy is leading to weakness the rupee, Nizam Idris, head-fixed income and currency strategy, Macquarie believes

The rupee today approached a record low on doubts whether the central bank can defend the currency with its existing cash-draining measures. "The market thought it was probably too soon for the central bank to make such dovish statements," he said in an interview to CNBC-TV18.
Additionally, Idris says that the Indian currency may weaken further to 62 against the dollar before the RBI announces a new slew of rupee volatility curbing measures. Below is the edited transcript of Idris' interview to CNBC-TV18.

Q: What has gone wrong in the currency market in India ever since the Reserve Bank of India's (RBI) commentary, is it that any kind of cushion it had has now been removed and the market is in freefall again?
A: The market is reacting to the view that perhaps the RBI sounded slightly dovish in their comments yesterday. Basically, what happened is that RBI put in some measures to stabilise the market and I suppose the market thought that it was too early to talk about unwinding those measures or exit strategy being mentioned yesterday. For me, it is probably a reflection of market’s concern that maybe the RBI’s measures taken away too quickly. Q: Is it a new low that you are staring at again?
A: Yes, our focus is still 62/USD. We haven't changed that even when the dollar/rupee was gravitating back down towards 59/USD and when the last measures were implemented we were saying that we could see the RBI tightening further by hiking the reserved requirement. For example, it would push the market into the 10.25 percent rate rather than 7.25 percent. Those sort of measures could still be put in place but still we think that the RBI may need to be pressured into doing further measures. Therefore, 62/USD could still be seen before RBI announces new measures.