Expect Rupee to trade around 59.50-60/$: Ananth Narayan, Standard Chartered Bank
"It looks like dollar-rupee will be caught in a range, a comfortable range 59-59.5 to 61-61.5."
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In a chat with ET Now, Ananth Narayan, Co-Head of Wholesale Banking, South Asia, Standard Chartered Bank, shares his views on Rupee.
ET Now: I will start off with the currency. The macro data at least domestically, the release has been okay. But the global picture is not quite clear. What is happening with the currency in light of all the macro data also that we have seen released over the last two weeks.
Ananth Narayan: The macro data is looking very positive last few days. Whether it is the fiscal deficit targets, whether it is the reduction in CPI, whether it is the trade, export performance over the last few months. Print as well. Things like oil prices stabilising. We are well below where we were before the Iraq crisis started. So a lot of good news there. We have also seen sustained inflows coming in right from September of last year. To be honest, so much so that we think the RBI is completely covered its forward sale book against the FCNR (B) swap window. So the reserves therefore are looking a lot more robust than they were in September last year. All very good. All looking like bright days continue to stay ahead.
Of course the RBI has been mopping up dollars very-very consistently, not letting the rupee appreciate and building up reserves at the same time. So it looks like dollar-rupee will be caught in a range, a comfortable range 59-59.5 to 61-61.5. The outright forwards are looking pretty high. So in a sense it is an incentive for exporters to increase their hedge ratios that does seem like being very sensible at this stage.
There is a risk of a bit of complacency coming into picture because of RBI’s consistent presence in both sides. Therefore a good case for exporters to increase hedge ratios. The external situation, whether it is Yellen speech yesterday, whether it is the events in Europe; we had a bit of a scare in Portugal in the last couple of weeks back. They will come and go. Just we had Iraq coming and going. We really cannot bargain for around that. The overall domestic picture looks pretty robust and that is pretty heartening.
ET Now: I will start off with the currency. The macro data at least domestically, the release has been okay. But the global picture is not quite clear. What is happening with the currency in light of all the macro data also that we have seen released over the last two weeks.
Ananth Narayan: The macro data is looking very positive last few days. Whether it is the fiscal deficit targets, whether it is the reduction in CPI, whether it is the trade, export performance over the last few months. Print as well. Things like oil prices stabilising. We are well below where we were before the Iraq crisis started. So a lot of good news there. We have also seen sustained inflows coming in right from September of last year. To be honest, so much so that we think the RBI is completely covered its forward sale book against the FCNR (B) swap window. So the reserves therefore are looking a lot more robust than they were in September last year. All very good. All looking like bright days continue to stay ahead.
Of course the RBI has been mopping up dollars very-very consistently, not letting the rupee appreciate and building up reserves at the same time. So it looks like dollar-rupee will be caught in a range, a comfortable range 59-59.5 to 61-61.5. The outright forwards are looking pretty high. So in a sense it is an incentive for exporters to increase their hedge ratios that does seem like being very sensible at this stage.
There is a risk of a bit of complacency coming into picture because of RBI’s consistent presence in both sides. Therefore a good case for exporters to increase hedge ratios. The external situation, whether it is Yellen speech yesterday, whether it is the events in Europe; we had a bit of a scare in Portugal in the last couple of weeks back. They will come and go. Just we had Iraq coming and going. We really cannot bargain for around that. The overall domestic picture looks pretty robust and that is pretty heartening.
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