Rupee stable; North Asian currencies feel Chinese heat: ANZ

A: We are actually watching the Chinese stock market very closely because the slump in the Chinese equities has now having an impact on the Asian stock market as well as the Asian currency markets.

Latha: What are you observing in terms of weaker currencies? Rupee, for the record, you can say it is the biggest one day percentage fall, but it appears to be an island of stability. Is the rupee and outperformer? How do you see it performing?

A: The rupee has been more stable compared to the other Asian currencies. That positively reflects that India is mostly driven by domestic factors rather than global factors in comparison with the other Asian markets. That is one of the reasons. Another reason is India is less of an exporter in the global economy which is unlike, for example, Korea, Taiwan, which very exposed to the global economy and global demand and also they are more linked to China economically compared to India. So, the impact that we are seeing price action today, is more impact on the North Asian currencies like the Korean won and the Taiwan dollar compared to the rupee.

Sumaira: How much more strength do you see on the dollar index from here?

A: I have to see, in the sense that overall we are still positive on the US dollar because we are still looking at the Fed start hiking interest rates in September. But we also see that price action in the dollar has been more mixed in terms of what is happening to Greece and price action in the euro, etc. But I would think that given the risk of sentiment in the market, partly because of the slump in Chinese equities, one of the major beneficiaries in this move will likely be the US dollar.