RBI opening direct dollar window may help rupee: Axis Bank

The fall of the Indian currency continued with the rupee touching its all-time low of 54.57 a dollar on Thursday against its previous closing of 54.49 a dollar. The weak rupee coupled with a volatile market kept investors away from risky assets. In an interview with CNBC-TV18, Ashok Gautam of Axis Bank said that it seems the rupee will be under pressure for sometime.

In early trade, the rupee had gained 20 paise but as the day progressed, its downward journey continued. According to Gautam, the falling gold prices, usual dollar buying and the developments regarding the eurozone is affecting the rupee. However, amidst this gloom, if the RBI announces a direct dollar window for oil companies, Gautam feels that it will take care of the market to a certain extent.  Below is the edited transcript of the interview on CNBC-TV18. Also watch the accompanying video. Q: The market is expecting the RBI to announce a direct dollar window for oil companies, similar to one they have done in 2008. Is that what you are hearing as well and will that provide any kind of respite to the rupee? A: I also read this news and if that comes, it's going to be okay for the market because then the oil companies will not be coming directly to the bank and RBI will be supplying dollars to them. Whenever the oil companies buy dollars from the market, there is always spill over effect in the market. That will actually be taken care of. If that step is taken, then I think it will be good for the time being. Q: What is happening in the market today because this morning we saw bit of strength to about 54.30, but that has not lasted very long, we are back to 54.51? A: The way it looks, the sentiment is that rupee will be under pressure for sometime and that is what is being reflected in the market rates also. We saw some kind of sustained buying from the levels of 54.30. Though we thought that it would be somewhere between 54.30 -54.40, it has crossed that and now it is going above 54.50. Two things are happening. You have seen gold prices coming down in the last three days. There is sustained gold related buying in the market also. Apart from that, usual dollar demand is there. Thirdly, the general sentiment which is impacting rupee is because of what is happening in the eurozone. There it is a risk off and dollar is in a very strong zone. That is impacting the rupee.