Great time for exporters to hedge and increase hedge ratios: Ananth Narayan, Standard Chartered

In a chat with ET Now, Ananth Narayan, Co-Head of Wholesale Banking, South Asia, Standard Chartered Bank, shares his outlook for the rupee.

ET Now: What is your view on the rupee?

Ananth Narayan: The Reserve Bank has been mopping up dollars to shore up its reserves and to hedge its forward sale of the FCNR (B) swap scheme. I think it still has room to go. That should hold the rupee in. It would not allow the dollar-rupee to fall below 59-58.5 or so, which is good from an RER perspective. Also from a competency perspective, it is great for the rupee.

One could, however, see a small possible blip going forward. If there is sustained dollar buying from the RBI, at some stage when the inflows dry up there could be a bit of a correction in the market.

Having said that, it is still a great time for exporters to hedge and increase the hedge ratios. The outright forward levels and differentials are still pretty high. Outright of Rs 64 for one year forward looks like an attractive level for exporters to increase the hedge ratios. That trend will continue.