Don't panic! Rupee slide due to global woes, not domestic

Rout in rupee continues as the currency tumbles to a 28-month low. The Indian currency has hit 68 per dollar already but analysts say there is nothing to panic. Khoon Goh, Senior Rates Strategist at ANZ Research has a forecast of Rs 69 per USD for 2017 and says that although the rupee depreciation is happening at a much faster pace than anticipated, he would wait for some time before considering any change in the forecast.Goh says the weakness in Indian currency is purely in line with other Asian currencies. He expects Yuan to touch 6.65 by the end of the year.

Ashutosh Khajuria, President - Treasury, Federal Bank echoes Goh's views. He believes that the weakness in the rupee is purely due to global economic developments.

"The weakness in the rupee is not related to merchant trade or external trade or remittance-related movement. So I believe there is nothing to panic," Khajuria says, adding that he expects support for the currency at 68.2 per USD.Below is the verbatim transcript of Khoon Goh & Ashutosh Khajuria\\'s interview with Ekta Batra & Anuj Singhal on CNBC-TV18.Anuj: 68 for the rupee/dollar. Do you see all time low soon?Goh: It looks that way. The market sentiment is bearish particularly towards emerging market currencies and despite generally most people are of the view that the Indian economy will be resilient. However, China doesn\\'t seem to be helping the rupee much. I think part of the reason why we are seeing the selloff in the rupee is that India has been the standout consensus trade so market positioning is long and we are starting to see people liquidate out of their position. So that is putting some near-term pressure. I am not expecting the rupee to go the way of other emerging market currencies. I think the further weakness should be capped by the Reserve Bank of India (RBI) who is employing the reserves to prevent further sharp depreciation. Ekta: What are the levels that you expect on the rupee and by when, for example the all time low of 68.8. When do you expect it and do you expect it?Goh: In terms of our forecast we do expect it to hit 69/USD but only towards 2017, so this move is happening a bit faster than we do expect but generally the moves that we are seeing in the rupee is in line with what we are seeing in the rest of the Asian currencies as well. So, I guess it is not a specific rupee weakness; it is just following inline weakness in broadly other currencies as well.Ekta: What is the mood in the dealing room right now?Khajuria: It is all driven by the selloff which is happening in equity market and custodian banks are buying dollars. So mainly driven by what is happening in the capital markets and it is not doing anything on merchant trade or external trade or even for that matter any remittance related movements or so. Anuj: What do you see trajectory from here on. We are at 68/USD, pretty close to the previous lows. Do you think previous lows would come in a hurry or do you see there should be some bit of support here now at this particular level?Khajuria: I think rupee should be supported at 68.20/USD or so and it can revert from there. If you are talking of 68.85/USD which was seen last in August 2013 then we are at least 18 months ahead of that and we have seen appreciation of rupee happening after that to the extent of 58.33/USD in May \\'14. So that is nothing to do with a sort of panic and all, it is because all over strength of dollar vis-à-vis all currencies and then therefore, some sort of flight towards safety and some selloff at these levels in all equity markets is resulting in some capital outflows from the country. I do not think it is going to last long because ultimately the fundamentals have not slipped off. So it\\'s a temporary phase and it should revert from 68.20/USD or so because equity market appears to have bottomed out.