Naveen Mathur, Director – Commodities, Currencies and International Business, Anand Rathi Wealth, says the overall perception is that the rupee might continue to 85 levels or so where the RBI might start intervention. They might be intervening because we have seen that the dollar reserves at the RBI in the end of September was at around $705 billion and is now standing at around $657 billion. The overall perspective is a little negative for the rupee, given the geopolitical scenario, world economics and other things.
What is it that you are penciling in, in terms of the currency? Is the pressure on the Rupee here to stay because of the stronger dollar?
Naveen Mathur: What we have seen over the last couple of days has been largely because of the dollar. After the US elections, the President-elect Donald Trump has announced certain policy measures which would be positive for the dollar index and therefore the dollar has appreciated largely. From the downside, we have seen in the last few months at around 104 levels or so to even touching beyond 107. Currently, it is at around 106.47. That is one of the major impacts which is taking the rupee to the depreciative side against the dollar.
The rupee touched an all-time low yesterday at around 84.70 and the spot today is quoting at around 84.74 or so. Now, the second aspect relates to the definite GDP numbers. The GDP numbers which came up for Q2, which is July-September quarter for this year, has been pretty much below the expectation, 5.4% as far as the realistic numbers are concerned, announced by the government last week. That is impacting the good stand on the India part of the story.
The FIIs have been pretty much aggressive in buying over the last one or two years for India. India is still looking very positive, but as far as the global economics and the geopolitical scenario are concerned, question marks have risen because of those impacts for India. We also see the Chinese Yuan depreciating 7.31 against the US dollar. I think 7.33 and 7.34 levels are pretty strong levels for the Chinese Yuan to test.
The overall perception is that the rupee might continue to 85 levels or so where the RBI might start intervention. They might be intervening because we have seen that the dollar reserves at the RBI in the end of September was at around $705 billion and is now standing at around $657 billion. The overall perspective is a little negative for the rupee, given the geopolitical scenario, world economics and other things.
The India story still remains resilient and we feel that the rupee would be around 84.50 to 84.75 levels. The RBI would not like the rupee to go beyond 84.75 or so. The BRICS news has impacted the rupee yesterday. We have seen 21 paisa depreciation in a day. All those factors are currently impacting the rupee against the dollar.
Given the weakness in the currency and a long patch at that, do you sense RBI intervention anytime soon?
Naveen Mathur: It is always a guessing game. But as far as the forex reserves are concerned, they have come down from $705 billion where they stood at the end of September. We are currently at around $657 billion. The RBI is intervening in the markets, but they are not intervening aggressively to hold the rupee depreciation. We also need to understand that the competitiveness of the exports are dependent upon the depreciative rupee against the dollar.
If the rupee depreciates, it helps the exports and helps the current account figures and other things. But the big depreciation would also not be in the interest of the country because we are importers for crude and other energy products. So, it will be a wait and watch. But as it seems, there has been intervention, but not an aggressive intervention by the RBI.
