See rupee in 55-56 range in short-term: HDFC Bank

In an interview to CNBC-TV18, Ashish Parthasarthy, head treasurer, HDFC Bank says that the rupee could see a range of 55-56 in the extreme short-term. "We are not looking at any major moves beyond these boundaries," he adds.

Also read: Gold must cross $1,800 soon or face a steep fall, says chart Below is the edited transcript of his interview with CNBC-TV18's Mitali Mukherjee and Reema Tendulkar. Q: What kind of immediate targets on rupee are traders talking about? A: We could see a range of 55-56 in the extreme short-term. We are not looking at any major moves beyond these boundaries. Q: How much of the pressure on the rupee is due to the month-end dollar buying usually seen by oil companies? A: I won't put too much of it into just month-end dollar buying. I think the pressure is given the trade deficit and current account deficit. The pressure is there day in and day out. So, month-end may be causes a little bit of extra pressure. Q: If the rupee continues to hover in at that 55-56 level, do you expect the RBI to step in or do you think it will be comfortable, if it continues to be at this range? A: I think the RBI will step in on days when there is volatility, much larger than what we observe on most of the days. I don’t think they are looking at levels to protect. They will just step in, whenever the volatility is very high. Q: Is this looking like a permanent thing? The last time we went to these levels everyone talked about temporary weakness in the money market. That was putting the currency down. Going into next year, what kind of levels do you think the rupee will probably bank around? A: We have to recognise that the trade deficit and current account deficit, which the economy faces, will definitely keep the pressure on the rupee. It can only be countered by strong capital flows. That would depend on investor sentiment both globally and specifically for India. Right now, that is slightly weaker for India definitely, given the uncertainties over the reform path and also on the fiscal deficit. Q: At current level, what's the currency market pricing in by way of movement in the winter session of Parliament, particularly with respect to FDI? Are they already pricing in the fact that FDI is unlikely to happen go through and therefore we will not get that big inflow of dollars? A: I think they are very uncertain about the path. Just announcement of FDI is unlikely to bring in dollars immediately. But there is obviously a scope for capital inflows because investor sentiment will be much better. So, it is more on that. I think the market is definitely uncertain on what shape and what path the reforms and FDI and everything will take.