Next port of support for rupee around 63/USD: Stanchart

Priyanka Kishore, currency strategist at Standard Chartered said next port of support for the rupee would be around 63/USD. "Technically, USD-INR has been in a bull-channel since about July 2011 and the upper resistance of this channel comes in only around 63," she added.

Furthermore, she advises importers to continue maintaining high foreign exchange hedge ratios but exporters should wait and let this wave of Fed tapering expectations go out of the system before initiating additional hedge positions. Also read: Rupee in uncharted territory post 60/USD: Axis Bank Below is the verbatim transcript of her interview on CNBC-TV18 Q: There are some reports on the wires indicating that dealers said that the rupee hit an all-time low because a lot of banks stop losses were triggered. Can you just throw some light in terms of what took place in the dealing room on the INR, that it breached 60 with such ferocity today? A: We had reportedly rumours of the central bank coming and intervening quite strongly around 59.58 levels throughout last week and that led to a sense that atleast in the short-term rupee would probably be range trading between 59.50-59.90. And a lot of tactical short positions got initiated with stop losses around current levels. With the currency going through 60 today, it is those stop losses, which are being taken out and hence this powerful surge higher above 60.29-60.30 levels. Q: You are not noticing this as a trend where there is a complete movement on the downside in overall emerging market (EM) currencies. It is purely for the rupee itself because of the reason that you just mentioned? A: Maybe for today it is rupee but overall if you look at last week, all other currencies were weakening, whereas the rupee was range trading because of the central bank continuously supplying dollars to the market. So, it would not be right to say it is entirely the rupee’s move. The rupee is at this point of time catching up with some of the moves, which have happened across emerging market currencies last week. Q: Now that the 60 level has been breached. What could the next port of support look like for the rupee? A: Technically, USD-INR has been in a bull-channel since about July 2011 and the upper resistance of this channel comes in only around 63. So, technically that is the level that is target on our charts. Q: What would you be recommending to your clients at this point in time in terms of a strategy on the INR, even your export focus clients? A: We have said as of last week and before that, we think that exporters should stay sidelined despite the Reserve Bank of India (RBI) coming in and trying to cap the upside because there is a fundamental shift that is going on out there globally and that is magnifying INR’s twin deficit risks, and adding onto the concern. So, we think that importers should continue to maintain a high foreign exchange (Fx) hedge ratios, but exporters should actually wait and let this wave of Fed tapering expectations go out of the system before they initiate additional hedging positions.