Ashok Gautam, head - Global Markets, Treasury, Axis Bank believes the Indian currency can fall to 63 against the dollar if it breaches the level of 62.82 against US dollar. The rupee today tumbled to a 9-week low of 62.66 against the greenback.
Below is the edited transcript of Elan Dutta and Latha Venkatesh’s interview with Gautam on CNBC-TV18.
Elan: What do you make of the fall? The equity space was weak anyways but what do you think contributed such a considerable weakening for the INR? Is it what is happening globally?
A: Yes, this is because of what happened in Argentina and suddenly the whole of the sentiment was off-risk. Due to the weaker Chinese data in the morning and then Argentina Peso devaluation it actually led to the classic risk that saw equities down across the globe.
In India also we have seen that equities are down and there has been sudden demand for the dollar which till now was there but people were still not actually rushing to buy it. However, today we have seen consistent dollar bids throughout the morning and that continued throughout the day.
The rupee still continues to be in a broader range which we have been saying for a long time of 61-63. Some of the critical levels which we will request viewers to keep a watch on are 62.82. That is one level which if it is taken then you can see a little bit bigger move beyond 63.
Latha: Did you not witness any exporters coming in and supplying? What was the other side? Who were the buyers and who were the sellers?
A: We saw continuous dollar demand since morning. There was continuous two-way play but the demand actually outstripped supply in the market. Earlier also we have seen emerging market currencies actually weakening against dollar but rupee was holding its ground. However, today, I think that ground actually gave way. This particular move which we saw in the morning actually was happening in emerging market currencies for some time. Luckily for India it was not happening.
Latha: What would you watch for very closely? What are your counterparts in other foreign banks telling you, which is the currency or set of currencies that India should now watch out for to try and predict how the rupee will go?
A: I will actually look at our own rupee's technical chart where 62.82 that is right now forming a big resistance for some time. If that resistance line is taken then I expect a quicker move beyond 63 for the dollar-INR. If all other emerging market currencies continue to weaken the pressure on the rupee will remain. As we always see once the slide starts for the rupee then we see people rushing in and trying to buy dollars which otherwise they think there will be supply, so they will wait.
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