Current sentiment is positive for rupee: Arvind Narayanan, DBS Bank

In a chat with ET Now, Arvind Narayanan of DBS Bank shares his outlook for the rupee. Excerpts:

ET Now: It has been a year to the life low on the currency. What is your sense - do you think those levels are long gone or could we re-visit them?

Arvind Narayanan: The current sentiment is positive for the rupee from quite a few angles - be it the FII flow or the investment sentiment or the confidence in policies. There was also an India re-rating story going around. Therefore, by and large, the sentiment is positive, driven by flows.

However, I would not read too much into this, because at various points in time, the central bank buys dollars and accumulates reserves. So, a very strong appreciation from here is unlikely, unless globally things change dramatically. However, by and large, I would assume the dollar-rupee will stay in a range with a small bias and we could still see dollar-rupee back at 61 levels or so.

ET Now: Considering how the monsoon has progressed, the flows and the fact that oil prices are collapsed, the rupee should ideally have gone way below 60?

Arvind Narayanan: The market is talking these data points with a bit of caution, because apart from the positive factors that you have highlighted, the market is circumspect as to what all changes can be expected in the next few months.