Arun Kaul of Punjab National Bank said the rupee would continue to remain under pressure. "The feeling in the market is that technically the rupee could touch Rs 41.50 before facing the level from which it will returned last year."
Excerpts from CNBC-TV18’s exclusive interview with Arun Kaul:
Q: Where can the local currency go given the kind of demand that we are seeing from oil marketing companies?
A: We have seen a very strong demand from oil companies and as a result there has been a continuous deprecation in the rupee for the last two days. Along with oil demand, we have also seen worries in the market on account of higher inflation. The continuously strengthening dollar is adding to the rupee depreciation. In the non-deliverable forward market, or NDF, we have noticed a large gap between the spot rate share and the one month forward NDAs, and not forward markets, is leading to some arbitrage opportunity for the currency, which does not put huge pressure on the rupee and hence it is continuing to depreciate. Right now, it is at Rs 41.22 or Rs 41.23, but the feeling in the market is that the rupee could further depreciate and go up to Rs 41.50 levels, from which it reversed last August. The feeling is that technically the rupee could touch Rs 41.50 before facing the level from which it will returned last year.
Q: What’s the road forward from here, you have talked about Rs 42 on the rupee vis-à-vis the dollar? How would the demand-supply situation pan out in the currency markets with a three-months time horizon?
A: The moment the rupee started depreciating, exporters started staying out. With oil trading pretty high and the Goldman Sachs report, which has unnerved the market, is leading to fear strong pressure on the rupee. Technically, it looks like the rupee could touch Rs 41.50, the level it did touch last August and reversed from that level. The feeling in the market is that the Indian unit could go up to that level and see a reversal from there. But the situation is totally different from last time. We will have to wait and see, but it looks like the rupee would continue to be under pressure.
Q: Is Rs 43 possible?
A: Rs 41.50 is what the market is talking about right now, we will have to wait and see whether it does cross that level and touch Rs 42.
Source: Moneycontrol.com
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