RBI has little headroom to control rupee slide: Keki Mistry, HDFC

In an interview with ET Now, Keki Mistry, chief executive of HDFC, speaks about the IIP numbers.

ET Now: A minus 3.5% number... how would you initially react to it?

Keki Mistry: Obviously much lower than what anyone expected but, hopefully, this will be the lowest and we will start seeing better numbers in the year ahead. But the good part is the previous month numbers have not been changed downards unlike what happened in January. So at least the 4% odd numbers that we had for February stayed on.

ET Now: We have also got the FY12 whole year numbers that have come in at 2.8% vis-à-vis 8.2%. This has been an absolute disappointment and the currency markets actually reacted to these numbers. The rupee stumbled to 53.58 from the levels of about 53.53 that we were holding on to. Given the scenario, how much more headroom do you think the RBI has at this point in time to intervene in the currency market because we saw the move yesterday? In addition to that, where do you think the rupee is heading?

Keki Mistry: There is not too much ability that RBI has at this moment to control the currency. Yes, it is more for the government to handle it rather than the RBI. The RBI can take a couple of measures but I do not know how much we will be able to help it in bringing the rupee higher. Once the speculative portion is over, one expects the rupee to stabilise around the 54 level.

ET Now: Lastly, do you expect further policy rate cuts in the current financial year? Or would you expect that the RBI will hold back simply because inflation is once again becoming a challenge?

Keki Mistry: It is very difficult to take a call on these things so early in the year. But having said that, I have always said you should expect about a 100 bps cut in the policy rate this year. Of that 100, we think 50 will be the first round so we could likely see another 50 bps cut in the course of the remaining months. But I do not see that cut happening immediately. The RBI is watching the IIP numbers and will continue watching the inflation and GDP numbers.