Forex and Treasury Management Consultant sees dollar strength continuing in the near-term. “I would feel a greater probability of a dollar fall globally rather than continued appreciation if one takes a look at 2009 as a whole, so it will probably remained underpinned for the near term. Later, I would look at greater probability of a dollar fall rather than a continued appreciation because to my total surprise despite slowdown, consumer spending coming down and despite oil price being down, they recorded another record in terms of the trade deficit.”
Q: Do you think Rs 50.50 will remain the top for the dollar-rupee at least for the next couple of quarters?
A: I would expect that in the near-term the dollar strength might continue. I am talking of the next 2-3 months because the flight to quality and the kind of Treasury bill yields we are seeing in the US suggests that flight to quality is continuing. If that continues then the dollar would remain underpinned but later in the year once markets become more normal what they have been for quite some time and particularly in December when there is always lack of liquidity in most of the global markets and once that happens, which I would expect to be around Q2 or certainly the second half of 2009, I would feel that the fundamentals of the dollar would come back into play. I would feel that a greater probability probably of a dollar fall globally rather than continued appreciation if one takes a look at 2009 as a whole, so it will probably remained underpinned for the near term.
Later, I would look at greater probability of a dollar fall rather than a continued appreciation because to my total surprise despite slowdown and despite consumer spending coming down and despite oil price being down, they recorded another record in terms of the trade deficit. There will be latest numbers, then the fiscal deficit is going completely haywire, all these fundamentals will start coming into play later in 2009.
Q: How would you relate all this to the dollar-rupee, do you think therefore that it has seen its highs, the first calendar quarter in 2009 as in all quarters is expected to be current account even or maybe even a current account surplus?
A: Traditionally the Q4 of the fiscal year that is Q1 of the calendar year have been surplus, so I doubt whether we will see that in the current quarter but we will have to wait until June for those figures to come out. RBI figures typically take some time to come out but what we are seeing in the last some time is that the rupee-dollar movement is reflecting what is happening to the dollar globally. This is my expectation that probably more sideways movement in the near term, not likely that the Rs 50 level would get breached but later in 2009, I would feel a greater possibility of Rs 45 rather than Rs 50, so that’s the kind of scenario one is looking at.
