Rupee to appreciate after hitting 69.50 level: Federal Bank

The Indian rupee recorded an all-time low on Thursday by closing at 68.75 level. There should be not much worry on the rupee side after this correction, says Ashutosh Khajuria, ED of Federal Bank.In an interview with CNBC-TV18, Khajuria said it is more of a dollar strength rather than the weakness of the Indian currency. He said if other comparable currencies are taken into account then rupee is on the same path. Maintaing a positive stance, he said the rupee should appreciate after hitting 69.50 against the dollar.Below is the verbatim transcript of Ashutosh Khajuria's interview to Latha Venkatesh & Sonia Shenoy on CNBC-TV18.Latha: What is the sense, are we going to see further weakness and if yes, to what extent?A: That would be a function of how much outflow happens from the debt and equity market by foreign portfolio investors (FPIs) and all because that would put pressure. However, I think Reserve Bank of India (RBI) has a very strong chest and as result of that there is all likelihood that there would be an intermittent intervention happening. As regards fundamentals, I think after this correction, there should not be much of a worry on the rupee side. It is more of a dollar strength rather than rupee weakness; I see it that way because if we see euro, yen, Indonesian rupiah and various others comparable peer currencies, I think rupee is on the same path, slightly better.Latha: What is the high for the dollar that you are looking at versus the rupee? A: I feel it could be anybody’s guess because once the momentum is there it can stop at any point in time where people will start finding value on the other side. So, I see it that it should somewhere around 69.50 or so should correct and come back – I mean rupee should appreciate thereafter. Sonia: Any estimates on the dollar index? A: I expect it to touch about 105 or so and thereafter I think there also there would be value in selling dollar. Latha: Where will the bond markets head; at the moment the 10-year is yielding less than the overnight repo, so, should we expect -- is the market pricing in an out of turn rate cut, how should we look at it or are people just buying the bonds because there is so much money with the banks? A: Going by the present level of 10-year, I think the market has already discounted 50 basis points cut and it could be 25 basis point out of turn and 25 basis point when policy is announced on 7th. I think both ways they think market would be little disappointed if we don’t have a 50 basis point cut.