Rupee to remain range-bound between 45.15-45.65/$: IndusInd

The rupee has witnessed a declining trend over the past three weeks, weighed down by dollar gains (from 73 to 76) against the euro and other currencies overseas not to mention a subdued trend in the equity market.

Moses Harding, executive vice president & HD-wholesale banking group of IndusInd Bank, in an exclusive interview with CNBC-TV18's Latha Venkatesh and Sonia Shenoy, said the INR/USD (rupee-dollar) rate may remain around 45.50 per dollar over the next two to seven days. Meanwhile, he sees rupee-dollar moving in the range of 45.15- 45.65 over the next 1-2 months.
 
"In the short to medium-term, overall negative sentiments around euro will drive the dollar further up. Meanwhile, a fall below 1.40 in the euro/dollar pair will bring negativity in the rupee as well," he adds.
 
Below is the verbatim transcript of his interview. Also watch the accompanying video. Q: What kind of weakness do you see in the rupee? Are you working with support levels for the euro-dollar as well? What are the levels or ranges you are looking at for the dollar-rupee?
A: As of now, most factors in play are negative for the rupee. One, negative news from euro zone, lower commodity prices are strengthening dollar. Second, the weak equity market, fear of FII pull out and demand driven more in the cash segment because exporters are covered and supplies are being met with forward contract and not the actual sales, will act as further dampners for the rupee.
  
All these factors have driven the rupee to above 45.25 per dollar, which is close to the strong rupee support level of 45.20 per dollar and if that goes, then weakness may extend to 45.50-45.65 per dollar. For the near-term, given the overall dollar strength and weakening momentum in the domestic stock market, it is expected to remain range-bound between 45.15 and 45.65 against the dollar in the next one month or so.
 
Q: What about the bond yields? Some buying was seen in bond yields, would you still be concerned abut inflationary pressures or do you think for the medium-term the yields will move to the higher end?
A: Global cues are now supporting bond market. The expectations of rate hike reversal in the western economies stand diluted now, although, domestic cues are weak. So sandwiched between negative domestic cues and positive global cues, 10-year yield at 8.35% is indeed attractive. However, one cannot rule out extended weakness to 8.45%-8.55% July to September. So 8.35-8.50% should be a good buy for strategic investors with a 6-12 months time horizon. Also read: Emerging market stock funds see USD 1.64bn outflows