Prefer to wait-and-watch to take fresh calls on rupee: Credit Suisse

The Indian currency is celebrating the ruling government’s victory in Uttar Pradesh polls. Bharatiya Janata Party (BJP) got a clear mandate in UP, the state which has the highest representation in the Rajya Sabha, with 31 members.

Rupee has hit near two-year highs and Tuesday it closed at at 16-month high at 65.82, which was last seen in November, 2015. It opened marginally higher at 65.76 per dollar today.

Commenting on the stellar show of the rupee, Ray Farris, Chief Strategist at Credit Suisse told CNBC-TV18, such rallies are driven by news events and currently the rupee is moving upwards due to the state elections. It is better to wait and watch for the trade to settle down before taking new call on the currency, he said.

The assembly elections have proved friendly for the market and the rollout of goods and services tax (GST) in July is a positive proposal in the medium-term, he said.

“This probably alters the trajectory for INR to some extent,” he said.

However, Farris noted rate hikes by Federal Reserve are in the pipeline later this year. The hikes may exhibit some amount of strength in dollar.

On whether the dollar index will sustain the 101-mark Farris said the US Dollar Index (DXY) can probably go up by three to four percent on how the Fed plays the rest of the year. But, he does not see a lot of dollar strength.

Watch video for the detailed discussion..