Raina thinks rupee could test levels of 65-66/USD but not 68-69/USD very soon. It could see weakness but in small doses.
The rupee gave up some of it gains intraday and at one time was hovering around 62/USD levels.
Moreover, all the recent measures taken by RBI to curb the rupee fall seem to have been factored in the current price, he adds
Also read: Rupee's worst over for now; see it at 62-64/$ range, says BoA
Below is verbatim transcript of his interview on CNBC-TV18
Q: Could you tell us what has been the activity and what has led to this one percent intraday dip in the rupee?
A: The rupee has been consolidating of late in a very narrow range and we have seen lot of supply and demand getting netted-off against each other. Now with taper fears again hitting the markets which could happen as early as in October, I think rupee seems to have bottomed out for this move. So, we can expect some more weakness in the days to come.
Q: What is the downside? Can the rupee revisit 65-66/USD?
A: Quite possible.
Q: Would that be the cap for it or would the previous lows of 68/USD also come into picture?
A: For that we need to keep a watch on how the global risk factors pan out in the days to come. Whether the taper happens in October or not or whether it goes to December but as of now there is weakening bias. We can visit 65 but not 68-69 so soon. We can see some weakness but may be in small doses.
Q: On the back of few of the measures which have been announced by the RBI governor the likes of FCNR swap etc. We have seen the rupee manage to outperform couple of its emerging market currencies. Do you think from hereon the rupee is more likely going to track the performance of its other emerging market peers and no longer going to outperform?
A: Lot of those measures have been factored in the current prices. We have visited 61.75 which was the technical low. We have revisited that twice and it has not been able to break that level technically. Going by the global factors also and recent measures also we think everything has been priced in, in the current pricing.
Q: What about the equity market flows? If we continue to see robust inflows would that change your view a bit?
A: After the Fed FOMC, we saw good amount of equity flows but of late flows have dried up. We are not seeing substantial flows in the equities or in the debt. So, we are not expecting too many flows also to come in the near future.
Q: You spoke about 65, how soon could those levels come on the rupee?
A: It depends on a lot of factors. So, timeframe is very difficult at the moment.
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