See rupee in 63.80-63.90/USD range: Federal Bank

Ashutosh Khajuria, Federal Bank in an interview to CNBC-TV18 spoke about the Greece impact on Indian currency and bond markets. According to him part of the ongoing Greece issues are already factored in by currency markets and may not impact rupee and yields in a big way.He sees rupee in 63.80-63.90 to the dollar range.Below is the transcript of Ashutosh Khajuria’s interview with Ekta Batra and Nigel D’souza on CNBC-TV18.Ekta: Can you tell us what your sense is in terms of how the rupee as well as the bond markets could react in today’s trading session given all the news flow globally over the weekend? A: Most of this drama was discounted on Friday itself. So, I do not see there would be a sudden shock that may impact the markets. But, I think most optimists expected some positive outcome to come over the weekend that has not come. But there are still two days to go - today and tomorrow of course. They are going in for referendum and it is going to happen on July, 5. So, it has been deferred to another week or so. However, what happens on June 30 is crucial and if they go for referendum, there could be a clear default happening on June, 30. So one is not sure of how the market would react to it or how International Monetary Fund (IMF) would change track. It is very difficult to predict right now.Going by what all that is happening, I would simply say, a part of it has already been factored in the currency as well as the other markets also. As regards to the strength of rupee -- all through we have been seeing that there has been a gradual depreciation of rupee happening vis-a-vis dollar but for a couple of weeks. Earlier, RBI has not actually intervened to support dollar and we saw rupee appreciating from 64 to as low 63.50-63.55 levels also. Now, if it depreciates a bit, maybe a percentage or so, maybe 50-60 paise from now over the next one week or so, I do not see there would be much of an intervention happening from RBI because that would mean something they would like to see looking into the trend, looking into the consecutive six months of exports falling etc.So, somehow I think that trade data of India would be the decisive factor wherein you may not see much of an intervention happening from RBI to stem the fall of rupee if at all it falls by half to one percent over the next three to four trading sessions.Nigel: What about the bond yields? How do you expect them to react? On Friday itself, we saw the cancellation of three bonds out of four government securities, so, in terms of the bond yields, how do you expect it to behave today?A: The cancellation of, I mean auctions of three bonds out of four was seen positively by the market, because one message has gone down, loud and clear that Government of India and Reserve Bank of India would not want government securities to be sold at throwaway prices. I think they want a reasonable price to be coming and any coupon would not be something which desperate government would want to raise resources. That means they have a second line of defence and as part of this market borrowing programme, they are not reducing the market borrowing programme, it continues to be like that. Maybe, the timing of it has been deferred and message has been very clear that beyond a particular yield, Reserve bank of India and Government of India together are not ready to issue government securities.