MC:Rupee may weaken to 45.5-46/$ by June end: StanChart
Anant Narayan, managing director of Standard Chartered Bank, in an interview with CNBC-TV18's Sonia Shenoy and Anuj Singhal, gave his views on rupee-dollar equation and how follow-on offers may attract large flows and foreign direct investments (FDIs).
Below is the verbatim transcript of his interview. Also watch the accompanying video.
Q: First a word on the dollar-rupee and the kind of trend that you are expecting to see?
A: The rupee-dollar equation is expected to remain range-bound. We are relatively bearish on the rupee, compared to the rest of Asia. Since the last weeks and months, money on account of QE2 is coming into Asia and other emerging markets, but not much to India. The drop is basically on concerns of high inflation issue and uncertainty about the growth story in the short run. We expect rupee to weaken marginally from here, may be 45.5-46 per dollar by June end. Don’t expect a dramatic move; however, for medium-term, the view is still bullish on the rupee. Also, one cannot discount the fact that large flows could come in on account of follow-on offering (FPOs) and foreign direct investments (FDIs). But, the base view is that rupee may weaken to 45.5-46 per dollar by June end and subsequently strengthen.
Q: We have QE2 ending in June, but there is already some debate on whether we will have QE3-what kind of trajectory is dollar taking now versus other currencies over the next few months?
A: We expect the greenback to actually strengthen against the rest of the majors. So euro, for instance, heading towards 1.35, sterling likewise, weakening against dollar. The story there essentially is like you mentioned. Once QE2 is behind us and we don’t really expect QE3 to come beyond that to sort of move away. We also expect positive sort of a spin rather than risk aversion spin, where the US growth story tends to pick up and maybe mild concerns about euro and the sovereign risks keeps the euro and sterling a little abated. We expect the dollar to do well against the euro and sterling. So dollar should do well against euro and the G10 in general, not so well against Asia ex-Japan.
