It is vital for the rupee to stabilise: Prateek Agarwal, ASK Investment Manager
Extreme high degree of volatility in the rupee on the stronger side helps the market, but may not be good for the economy.
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ET Now caught up with Prateek Agarwal, Business Head & CIO, ASK Investment Manager, for his opinion on the the outlook for the rupee.
ET Now: Is it a good time now to revisit some of those exporters because it is highly unlikely that Reserve Bank of India will allow rupee to appreciate quite dramatically? Because if the rupee appreciates, it will automatically challenge all the economic recovery. CAD problems will come to the fore and exporters will rendered extremely uncompetitive. What is your take on this?
Prateek Agarwal: Yes, I would agree with you completely. The rupee has really appreciated to a level higher than was warranted. Policymakers themselves have been saying so. I thought they were comfortable when the rupee was at 60-61 kind of a band.
It is vital for the economy that rupee stabilises at whatever level it touches. That alone can help people plan and export and grow. Extreme high degree of volatility in the rupee on the stronger side helps the market, but may not be good for the economy.
We have seen what happened in the past when the rupee appreciated very sharply to 40. For some time, we had run a current account surplus but after that, the deficit became extremely huge. So, I am of the view that the rupee needs to stabilise. It should stabilise at current levels.
After the sharp run-up in other parts of the market, exporters have been doing well. Markets have given them a miss. Perhaps it is time in terms of even sector rotation that the market looked at that pack.
ET Now: Is it a good time now to revisit some of those exporters because it is highly unlikely that Reserve Bank of India will allow rupee to appreciate quite dramatically? Because if the rupee appreciates, it will automatically challenge all the economic recovery. CAD problems will come to the fore and exporters will rendered extremely uncompetitive. What is your take on this?
Prateek Agarwal: Yes, I would agree with you completely. The rupee has really appreciated to a level higher than was warranted. Policymakers themselves have been saying so. I thought they were comfortable when the rupee was at 60-61 kind of a band.
It is vital for the economy that rupee stabilises at whatever level it touches. That alone can help people plan and export and grow. Extreme high degree of volatility in the rupee on the stronger side helps the market, but may not be good for the economy.
We have seen what happened in the past when the rupee appreciated very sharply to 40. For some time, we had run a current account surplus but after that, the deficit became extremely huge. So, I am of the view that the rupee needs to stabilise. It should stabilise at current levels.
After the sharp run-up in other parts of the market, exporters have been doing well. Markets have given them a miss. Perhaps it is time in terms of even sector rotation that the market looked at that pack.
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