Dominic Bunning, associate director- Fx strategy of HSBC says it may be the beginning of the end of the dollar bull run. Historically, the average rally on the dollar index has been 20 percent, but since 2011, the dollar has rallied 40 percent. The eventual rate hikes are already priced into the dollar, is the HSBC view.
Dominic Bunning believes dollar is likely to strengthen in 2015 and foresees dollar-INR 63/USD at the end of next year.
Dominic Bunning of HSBC says at the moment, dollar strength is coming through and post the overnight comments from the European Central Bank (ECB) and India‘s trade numbers showing October exports growth at its lowest level since March 2014, a little rupee weakness was on the cards.
"Overall if we do get a scenario where the dollar strengthens more broadly - and we do see that - then it will be pretty hard for most EM currencies to remain resilient... But we don't see as an aggressive sell-off as we saw last year," said Dominic Bunning, currency strategist at HSBC.
The rupee, Dominic Bunning, associate - FX Strategy, HSBC, says is expected to be one of the bet performers in the emerging market (EM) basket.
Currencies have seen a good reaction in terms of intraday reversal for all the major EMs; the Indian Rupee and the Indonesian Rupiah have been resilient in February.
Going forward, he expects South Asian currencies to be under pressure. The RBI would like to keep rupee well supported,†he says.
Dominic Bunning, Associate - FX Strategy, HSBC expects dollar to strengthen going forward against emerging market currencies.
The oil swap window provided by RBI is not going to last forever and there is a rising concern that there will be more residual dollar demand in the market from oil companies and that domestic factor is of key importance to the rupee, says Dominic Bunning, Associate - FX Strategy, HSBC.
The dollar could strengthen in the medium-term if the Fed starts its tapeing in September, says Dominic Bunning, HSBC.
HSBC's Dominic Bunning finds it difficult to be positive on the Indian currency in the near term. He believes if markets are a bit positive on general risk assets then rupee can look a little more attractive given its high yield.
Dominic Bunning, associate director – FX strategy, HSBC says that even though expectations are that emerging markets are supposed to perform well, this has already been discounted by the market. The US is may show minor recovery. There will be more demand for dollars at least in the short-term, he says.
Although the rupee was weak and continues to fall; it would only be in the short-term. Stability in the rupee would be back soon, Dominic Bunning of HSBC said.
Dominic Bunning of HSBC in an interview to CNBC-TV18 says currency may continue to make gains and expects rupee to appreciation. “We can certainly see dollar-rupee trade lower. We have got end of Q1 target of around 53 for dollar-rupee. We do still see some more appreciation for the rupee from here,†he asserts.