Web Exclusive: What's in store for the Rupee?
To boost the Indian currency, the RBI has asked the exporters to convert 50% of their foreign exchange holdings into rupees
In a move to boost the Indian currency, the RBI has asked the exporters to convert 50% of their foreign exchange holdings into rupees. Was this move anticipated and what is the road ahead for the INR? Check out the opinions of top research houses across the country.
Shubhada Rao, Chief Economist, YES Bank
RBI intervention was not a surprise considering the speculation in spot and forward markets. At the same time, the central bank will do everything in its capacity to preserve the forex it holds. So, going beyond intervention, the RBI may purchase of oil bonds or IMD/RIB type deposits can be considered in case of extreme stress. Another option is tightening in gold imports. Given the constant monitoring, I think the idea of the Rupee beyond 55 looks farfetched.
AK Prabhakar, Senior Vice President (Equity Research), Anand Rathi
Today's recovery in the rupee can be termed as a pullback. We strongly feel that it will touch 56-57 levels against the dollar in the near-term. The foreign fund outflow and delaying GAAR by a year does not really solve the purpose. Given the weakness in the rupee, I feel there is more downside risk to the equity markets. The Nifty can slip to 4,500 levels if the INR was to slip to 54 levels. As regards specific companies / sectors, the rupee-dollar equation will prove beneficial for the pharmaceutical companies and textile companies because of their export oriented nature. Importers will be impacted negatively.
Kishor Ostwal, CMD, CNI Research
With the Rupee out of control, the Government and the RBI had to do something to stop the freefall. Considering that it never witnessed such a rapid fall earlier, the RBI intervention comes in as a temporary relief. After the price rigging reports regarding guar gum came into the limelight, the speculation in the commodity markets got shifted to the currency segment. I won’t be surprised if the Rupee slips to 54.34 (the previous low) and do not rule out the possibility of 57 levels also.
Arun Kejriwal, founder, Kejriwal Research and Investment Services
The RBI has acted as a regulator to stem the freefall of our currency, which is a good step. However, one has to remember that almost all the currencies across the globe are in a bad state. So, if the global crisis continues, the Rupee will come under further pressure as Dollar is a reserve currency to which everyone will go to. What worrying the most is the increasing gap in the balance of trade (BoT) payment, which will continue to weigh on the Indian economy.
Atul Shah, Head-Commodities, Emkay Global Financial Services
The RBI intervention seems to have a temporary impact on the Rupee movement. This is policy matter and government should do something about it. Overall depreciation in the rupee will impact commodities.