Rupee may touch 61.50/$ in the near term: Moses Harding

A whole set of negative news on weak global equities, strengthening dollar and the rising crude prices have been weakening the rupee, said Moses Harding of IndusInd Bank. Speaking to CNBC-TV18, he said that surging crude oil prices raised concerns on its impact on the India’s current account deficit (CAD) have all weakened the rupee.

The Indian currency revisited the psychological mark of 60/USD on Wednesday. He has a bearish outlook towards the currency in the near term and sees it touching 61.50 in the near-term. He also said that if euro-dollar levels fell below 29.50, then it may touch to historic lows of 60.70. He sees no intervention by the Reserve Bank of India (RBI) in today's trade. It should intervene to restrict rupee's fall, he says. Also read: Rupee won't breach 60.25/$; see no RBI intervention: DBS Below is the edited transcript of his interview to CNBC-TV18. Q: What has led to this recent sell off? Is it purely because of the kind of dollar strength that we have seen? A: It is a combination of weak global equity and strong dollar strength. Also for the Indian context, the crude oil price is also showing an uptrend. Crude prices above USD 106-107 will be bad on the current account deficit (CAD). So overall there are more and more negative cues coming in to play that are driving the rupee weak. Q: Who is buying today? A: People who have missed 59.5 and below on Tuesday are buying. This is because they are seeing no Reserve Bank of India (RBI) at 59.90-60. Wednesday’s break of 60 has brought in a panic. The risk is that if Euro goes below 29.5; 60.35-60.40 which is the near support for the rupee; could give way towards the historic low of 60.76. That is the risk in play now. Q: So, the level you will watch will be 60.70. What is the slightly, likely support level for the rupee? A: As of now 60.10. We have gone into a 60-61.5 consolidation from 59-60. So, the trend is bearish for rupee towards 61.5 in the near term. A level below 60 will attract lot of importers. How the market looks at it is that only any administrative fixtures can be used to defend rupee in the absence of any credible measures. Q: Is there any expectation that RBI will intervene or has RBI made it clear that it can't do much. PSU banks were not selling today? A: One good thing is that the Liquidity adjustment facility (LAF) drawdown is near zero. So, that gives RBI better fire power to sell dollars. The question is; where are the dollars? It is a catch-22 situation. However, I feel RBI should try and work overtime to defend. Q: For the past two weeks, some dealers tell us that they work phones and tell you not to take more positions than you must. They have reined in speculative activity by just talking to dealers. The dealers have been saying this for some days now. They are not working the phones today? A: I don’t blame the RBI. Unlike the exchange trade of futures market, we know the open interest on a real-time basis. What you see is not real time. So, RBI being the regulator, they have the right to feel the pulse of the market and know the real time open interest of the market. As long as the dealers operate within the intraday limit set by the bourse and overnight limit set by the RBI, there cannot be any fixtures on that.