Rupee headed for 65/$ unless RBI keeps stepping in: HDFC Bk

Continuing its free fall, the rupee today breached 63-mark a dollar to end at record low of 63.13 per dollar. It fell to historic intra-day low of 63.30 today. According to Ashutosh Raina, Head - FX Trading, HDFC Bank, it was a short covering in the last half an hour that pulled the rupee higher.

He told CNBC-TV18 that the next target for rupee is 65 per dollar. However, he believes that some measures coming from the RBI or the government can stop it from going there. Below is the verbatim transcript of his interview to CNBC-TV18 Q: What did you make of the freefall that we saw in the last half hour? A: It was basically the short covering in the last half an hour that pulled it higher. Q: Every level seems to be getting smashed every new week. So, what really are you predicting for the rupee going ahead? A: We have entered uncharted territory as of now. Next target is Rs 65 unless some intervention or some supply comes into the market. Any big flows or some measures coming from the RBI or the government can stop it from going to 65. Q: Were you getting very negative vibes from the non-deliverable forward (NDF) market? Did you hear of trades at 66-67 levels? A: We don’t really think NDF is driving it higher at the moment. It’s just the onshore market at the moment where it is lack of supply which is driving it higher and higher. Q: There was no Reserve Bank of India (RBI) supply at all you think today? A: I doubt there was any supply. Q: Most of the purchases you think were foreign institutional investors (FII) oriented or were there also a lot of domestic importer led purchases? A: Domestic importers anyways are there whatever the level may be. May be the stock market fall accentuated the rise in the dollar rupee, but net-net it was lack of supplies which is really driving the market. Q: There was a widespread feeling that today volumes were much more limited than a normal day. How much would you put the volumes at – since we don’t have a real time volume on the OTC market? Was it half the normal levels? A: Volumes are normal as everyday. The only thing is that the markets were illiquid and even covering small a volume creates such a volatility which was undesired.