Rupee may see pullback to 46 36 by April-May StanChart

15
Vote


We have seen a fairly strong performance by the Indian rupee. At the moment, rupee has been in the range of 44.68. It is a four month high for the rupee itself. This is happening in the context of higher crude prices. It’s a bit unusual, but export performance has been very good.
Q4 is usually a good quarter for the rupee as there are a lot of dollar flows. Traditionally, exporters and people who have raised loans abroad bring back their money in Q4. It’s a common phenomenon to see a lot of dollar flows coming in March.
Anant Narayan, MD-Regional head of fixed Income & Currency Trading (South Asia) at Standard Chartered Bank, in an interview with Latha Venkatesh and Sonia Shenoy, gave his views on the phenomenon of strengthening rupee with a lot of dollar flows and whether it will extend beyond March 31.
Below is the verbatim transcript of the interview. Also watch the accompanying video.
Q: Does the strength of rupee surprise you? Do you see it going beyond March 31?
A: In the short run, it looks like the strength will continue. The market wasn’t position for a stronger rupee. Given the oil prices, global phenomenon and equity markets looking soft, people were prepared for a weakening rupee. The Q4 flows have helped on the positive side for the rupee.
There have been talks of European central bank (ECB) inflows coming in the recent past. However, having said that, towards the end of Q2 all the fundamental factors including oil prices, questions about the current account deficit, the overall balance of payments and higher dollar rates coming to an end of the quantitative easing (QE) should see dollar strengthen against the rupee towards 46 mark. In the short run, we could possibly test 44.5 mark.
Q: The 44.5 level does not see a long journey from here. What is the behaviour of exporters? Do you expect that at certain level they may capitulate? Most of the exporters have also said that they are not hedged beyond a quarter. Do you think that they might panic and sell-off?
A: They have been increasing their hedge ratio over the past few days. Every breaking level breaks in certain amount of more exporters coming in. Asians have turned the sentiment towards exporters increasing the hedge ratios.
The 44.5 mark is to far away and is a strong technical level and if that breaks, we could see 44.20 level as well. Given the overall conditions that oil prices look sticky, coming April and May we should see a pullback in the dollar towards the 46 mark.
Q: Some technical analysts are pointing that the dollar index has been weakening for quite sometime now. The dollar shorts are now at some record levels. It is a stronger than expected performance from the US markets which means that more money would flow as a currency and to dollar related asset. Would dollar bottom out sometime soon? The commodities look like peaking off. Some of the commodities have peaked off in the soft. Normally, this is a trend that goes together with strong dollar and weak commodities. Could dollar bottom out sometime?
A: We expect that to happen in the short and medium run. Interest rate differentials are driving the currency markets globally. Currency such as euro is expected to see a rate hike, quicker than US. Once QE2 gets over, the broad expectation is given the growth in the US markets; we should see the US rates going up as well.
Towards the second half of the year, one would expect that the differentials would ease off in the favour of the dollar. At this point of time, we could see a recovery at the dollar stage.
In the short-run given the expected rate hikes in the euro zone and some other zones while the QE 2 still continues in the US, we could see euro go up to 45-48. On the dollar yen though, given that one doesn’t expect Japan to bias on the monetary side, we could see dollar yen move up to 84.
Q: Forty six that you mentioned on the dollar rupee. Where do you see that in the second quarter?
A: Towards the end of June. The broad consensus seems that in the second half of the year once we have seen the 46 hump, growth could revert back into the Indian market. In this case, it would change the equations as far as capital inflows are concerned. The second half and end of the year could be a different story altogether.
[Story Source] [Contest win Rs 1000-100,000 now]

This post was submitted by superblogger.

Related Posts
US visa fee hike to face stiff resistance from Indian IT industry | News

US visa fee hike to face stiff resistance from Indian IT industry | News

BANGALORE: The Indian IT industry to oppose US bill on the imminent hike in visa fee on its on-site engineers deployed in American firms.Industry's representative body, Nasscom said, "We understand th...
Indian cos to take extra $200 mn loss on US visa fee hike

Indian cos to take extra $200 mn loss on US visa fee hike

Terming a US proposal to increase visa fees as discriminatory, Commerce and Industry Minister Anand Sharma on Tuesday said the increase would cost Indian firms $200 million extra a year and make them ...
Indian-American found guilty of espionage in US

Indian-American found guilty of espionage in US

Washington: Indian-American Noshir S Gowadia, a former B-52 stealth bomber engineer, faces life imprisonment after a US federal jury convicted him of selling sensitive cruise missile technology and ot...
 H-1B visa application fee hiked, to hit Indian IT ‎

H-1B visa application fee hiked, to hit Indian IT ‎

A huge blow to the Indian IT companies, the United States substantially hiked its application fees for H-1B and L1 visas.The US senate on Friday, Aug 6 approved increase in application fees for H-1B...
  Somdev eyes direct entry at US Open

Somdev eyes direct entry at US Open

After achieving an important milestone, Somdev Devvarman feels he’s in a good spot to make a direct entry at the US Open.Nothing comes easy in sports. India's Somdev Devvarman had to wait for nearl...
Google in Talks to Buy Mobile

Google in Talks to Buy Mobile

Google Inc is in talks to buy mobile-payments company Softcard, technology news website TechCrunch reported on Friday, citing people familiar with the matter.The deal could help pair Google with...

Leave a Reply

 
We will keep You Updated...
Get Free Email Newsletter from VoteUpIndia Sign up for our free email newsletter. (Help?)
Read latest headlines in your favorite news reader
Follow VoteUpIndia  on Twitter Become a VoteUpIndia Fan on Facebook Subscribe to VoteUpIndia in Google Reader Add VoteUpIndia  to My Yahoo Add VoteUpIndia  to Netvibes Subscribe to Free Techie Buzz RSS Feed
Sponsored Links
Advertisements
Featured Video
Amazon
Best Storytellers
Powered by Authors Widget
Recent Posts

McDonald's Suspends Employee, Probes Child's Eviction From Pune Outlet

PUNE: After reports emerged that an eight-year-old destitute child was thrown out of an outlet of...

Why Arjun Made a Humble Request to Cast Sonakshi in Tevar

It's all about wearing your Tevar, this new year. Arjun Kapoor looked dapper at the initial promotions...

5 things Modi needs to do ASAP, after Bihar loss

It's not correct to transpose the outcome from a state election as a referendum on the central government,...

Sehwag's half century in All Star tournament.

The first match has been really special. We thoroughly enjoyed being here. New York, you were brilliant....

Bihar Defeat May Lead to Silent Rebellion in BJP Against PM, Amit Shah: Arun Shourie to NDTV

NEW DELHI: In the aftermath of the BJP's debacle in Bihar, Arun Shourie, one time admirer of Narendra...

Court Refuses to Stop Gillette Razor Ad Starring Deepika Padukone

New Delhi: The Delhi High Court has refused to stop a Gillette razor advertisement starring Deepika...

Bigg Boss 9: Roopal Tyagi voted out of the house

TV actor Roopal Tyagi was evicted from reality show Bigg Boss on Sunday’s episode. Roopal is the...
Recent Comments
How i can submit my story...? and where i can see the staus of votes for this?
IFFI lose its art value,so it became lose it commercial value
Dear sir I am sending an article which is based on true story and needs your help to lime light such incidents which never come in
Thanks for the interesting article. Great Post. Keep it up
It is indeed heartening to learn that LSE, the world leader in higher education, will join hands with the most admired Reliance Foun
Tag Cloud