Rupee to hover in 62.5-63.5/$ today on RBI moves: HDFC Bank

The recent steps taken by the Reserve Bank of India to rein in the rupee volatility will aid the market sentiment believes Ashutosh Raina of HDFC Bank.

In an interview to CNBC-TV18, Raina says that the RBI moves to force the market to cut long dollar positions seem to have been achieved and hence the rupee is likely to be rangebound between 62.5-63.5 against the US dollar.
The Reserve Bank of India on Tuesday late evening announced that it would conduct an open market operation (OMO) to buy government bonds of Rs 8,000 crore from the market on August 23, 2013.

Below is the edited transcript of Raina’s interview to CNBC-TV18. Q: We are seeing some bit of strength with regard to the way other currencies versus the dollar. The dollar has weakened a bit. What is the best case scenario for the rupee for today at least?
A: We are expecting the Federal Open Market Committee (FOMC) minutes at the end of the day today. So maybe it is a part of squaring or trimming overbought dollar positions. That could be the reason for this dollar weakness across the board. Q: In terms of local triggers, there are some moves that have come in from the Reserve Bank of India (RBI) last evening, they are buying about 8000 crore back of bonds in open market operations (OMO) and thereafter as and when required. Do you suppose atleast sentiment will be lending some support today?
A: Yes, definitely. The RBI has taken stringent measures to drain the rupee liquidity from market and force market to cut long dollar positions. So, the objective seems to have been achieved and now they seem to be reversing a part of those measures. It should be a positive sentiment for the market. Q: What will be range for the day that you see?
A: The range can be somewhere around 62.50/USD-63.50/USD for the day.