Dollar at a high, watch out for Re at 55/$: BNP Paribas

The Indian currency hit a record low on Wednesday, dropping as low as 54.36 to the dollar, breaching its previous record low of 54.30 set in December. The mood is no different in other parts of the world as well. With Greece failing to form a stable government, Asian currencies like South Korea's won and Malaysia's ringgit have tumbled. The euro too have slipped below $1.28.

In an interview with CNBC-TV18, Chin Loo, Senior Currency Strategist at BNP Paribas talks about the fall in currencies across the globe. She points out to the uncertainty in Greece and says, "It's so difficult to see where the top for the dollar could be." As far as the rupee is concerned, Loo said, "The next psychological levels, possibly the 55 level, would be the next level to watch for." Below is the edited transcript of the interview on CNBC-TV18. Also watch the accompanying video. Q: What is the sense you are getting on the euro dollar, how much more depths would you prepare for in the short-term and among the Asian currencies what kind of weakness do you see in the rupee and other currencies. Would they all fall in sync? A: I think now the market is pricing in a sort of a worse case scenario with a possibility of Greece exiting the EU and this pricing in has been extremely detrimental to the euro and beneficial for the US dollar. There has been broad based dollar buying and that dollar buying seems to have stepped up in scale today. Yesterday we did see the dollar rally across the board against the rupee, with dollar rupee trading to a new high. While the uncertainty in Greece remains it’s so difficult to see where the top for the dollar could be. Q: What would you prepare for on the rupee itself. How much worse can it get you think? A: From here we go to uncharted territories. I would think, anybody's guess is as good as mine. The next psychological levels, possibly the 55 level, would be the next level to watch for. Given that this is a broad based dollar rally, it would seem futile for central banks in Asia to do too much to turn the tide against the US dollar. But, certainly with volatility spiking, I think central banks would want to reduce this volatility. It has been against the wind so we do expect that to come in to try to smoothen the rise in the dollar. But, this is a broad based dollar buy.