Rupee to remain under pressure; may touch 59/$: HDFC Bank

The rupee is likely to remain under pressure against the greenback as global markets await outcome of Federal Open Market Committee (FOMC) meeting, says Ashutosh Raina, head of FX Trading, HDFC Bank. (Read More)

The two-day Fed meeting that kick starts today, will be the main focus for global markets this week. Investors will be listening for details on when the Fed may start scaling back its USD 85 billion monthly bond purchases.

He believes rupee can touch 59 against the dollar in the medium-term. In an interview to CNBC-TV18, Raina says that outflows are likely to continue though there may not be fresh inflows during the period when Fed decides to taper off  the quantitative easing.

Below is the verbatim transcript of Ashutosh Raina's interview on CNBC-TV18 Q: How are you reading this, the decision is expected tomorrow night, Ben Bernanke is expected to speak on Wednesday night and the run upto that, do you see the rupee remaining at these 58/USD levels?
A: Yes, considering the dollar strength overseas and the FOMC expected to taper the QE, we expect the dollar/rupee to be a bit under pressure till FOMC minutes come out. Q: Going ahead, some analysts feel that the Fed won’t taper with QE at least as far as this meeting goes and status quo will be maintained till 2014. So post Wednesday, depending on the decision of the Fed and if indeed a surprise does come, how do you expect the rupee to react?
A: Even if it is not in September, tapering may take place in December. So we may expect the outflows to continue and we may not expect fresh inflows during the period the QE gets tapering. Q: What range would you work with as far as the rupee goes at least in the medium-term till December?
A: Medium-term, it should touch the last time highs of around 59/USD levels. From thereon, we will have to see that central bank action as well as the demand/supply mismatch – that may happen. During medium-term we can get last time highs.