52 is a fair value for rupee: Manoj Rane, BNP Paribas

In a chat with ET Now, Manoj Rane, MD & Head Fixed Income & Treasury-India, BNP Paribas, gives his overview on rupee.

ET Now: The rupee has climbed back today. What do you expect the trajectory for the rupee is going to be until end December?

Manoj Rane: We have to stay clear of extremes. One such extreme had happened a few weeks ago which was that it had swung and people had forecast it to go all the way to 50. This is somewhere in between. Whatever has been done by the government has been discussed and debated enough. This has indeed put some positivity on sentiment. However, the proof of the pudding is in the eating. They have been able to grasp the low hanging fruit.

However, there is a lot of work ahead and the real trajectory of the currency will be determined thereafter. Some amount of weakness is important. The currency was at 48.90 odd exactly a year ago. Therefore, we are about 8% or 9% weaker from there. There is a fairly significant interest rate differential between the dollar and rupee. It is more significant these days with the dollar paying practically nothing on the interest side.

So, this level of depreciation is healthy. It is required and it is bound to happen given interest rate differentials. We have to stay clear the extremes. 52 is a fair value for rupee. We would see a bit of overshoot towards 53-53.5. However, those are levels to sell again but 52 and around are levels to cover from an importer point of view or from someone who needs to make payments.