RBI intervention needs to be stronger on rupee: Sajal Gupta, Edelweiss Securities
As of now, exporters don’t want to sell because they feel that rupee can go to 72-73
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Rupee can go to 72 in next one week, Sajal Gupta, Head, Forex and Rates, Edelweiss Securities, tells ET Now.
Edited excerpts:
The rupee is now at 71 to a dollar. Do you think RBI should step in? Also, for all those naysayers who are a little alarmed about its impact on fiscal deficit, how does weak rupee really affect macros?
A weak rupee is right now responding to the panic in the market. Both debt and equity flows have been positive for the month. Actually, we are not seeing large outflows from debt and equity markets as of now in India. Rupee has been following bad news globally – be it crude or Turkish Lira and it is not correlated with Indian macros at all.
In this panic situation, there has be to some more comfort from RBI in terms of stronger intervention because we are a partially convertible currency and in case there is a strong demand for currency, then RBI is the only supplier of dollar. As of now, exporters don’t want to sell because they feel that it can go to 72 or 73 and all importers are buying in panic.
Do you think that 70-71 would be a strong range for the currency right now?
The technicals always work that way. In case something is moving up, it should move further up and there would be extensions on the price. Speculators who are long on dollar as of now, would not move out of their positions in case there is a price movement on the other side.
Where does the currency go from here?
I would say that this can move to at least 72 in the next three four weeks. In fact, it can go to 72 in next one week as well. It is the problem of the momentum.
Edited excerpts:
The rupee is now at 71 to a dollar. Do you think RBI should step in? Also, for all those naysayers who are a little alarmed about its impact on fiscal deficit, how does weak rupee really affect macros?
A weak rupee is right now responding to the panic in the market. Both debt and equity flows have been positive for the month. Actually, we are not seeing large outflows from debt and equity markets as of now in India. Rupee has been following bad news globally – be it crude or Turkish Lira and it is not correlated with Indian macros at all.
In this panic situation, there has be to some more comfort from RBI in terms of stronger intervention because we are a partially convertible currency and in case there is a strong demand for currency, then RBI is the only supplier of dollar. As of now, exporters don’t want to sell because they feel that it can go to 72 or 73 and all importers are buying in panic.
Do you think that 70-71 would be a strong range for the currency right now?
The technicals always work that way. In case something is moving up, it should move further up and there would be extensions on the price. Speculators who are long on dollar as of now, would not move out of their positions in case there is a price movement on the other side.
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As of now, the entire market is one way, importers are buying dollars, exporters who have already sold are moving out because if they hold on to their positions they have to pay MTM on that. They would even be buyers in the current market. it is a one-sided market as of now. Until and unless, strong hands seize the direction of the market, or some very good international news. RBI intervention needs to be stronger on this.Where does the currency go from here?
I would say that this can move to at least 72 in the next three four weeks. In fact, it can go to 72 in next one week as well. It is the problem of the momentum.
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