Will RBI intervene now as rupee crosses 82-mark? Bhaskar Panda answers

“The depreciation mode of the rupee will still be intact till the time the Fed keeps on raising interest rates and the dollar index keeps on moving higher and the rest of the world goes into a kind of recession. India remains a little bit optimistic in that sense,”
says Bhaskar Panda, EVP and Head Overseas Treasury, HDFC Bank. Edited excerpts.


Does this print on the currency surprise you as we are now staring at fresh all-time lows of 82.24 against the dollar?

Not really. See overnight, if you look at how it has evolved, the dollar index has moved past 112 and after the OPEC plus’s decision to cut 200,000 barrels per day production, oil prices have remained higher than expected. So all these are negatives for USD-INR and any which way there were some outflows yesterday. So all the sentiments have put the rupee beyond 82. I think what we should understand is that we are not alone, for example USD-INR is not alone. There are other currencies in similar boats, so we should not feel bad about it.

We are not feeling bad about it but just wanted to understand will 83 be that line in the sand on the weakening side or what are the levels that we should expect because the Reuters poll is suggesting that 83 is possible, but the forecast range is between Rs 80 and 84 against the dollar. Where do you see it settling?
Once we are past 82, the next target is around 83. What fundamentally we are talking about is that the depreciation mode of the rupee will still be intact till the time the Fed keeps on raising interest rates and the dollar index keeps on moving higher and the rest of the world goes into a kind of recession. India remains a little bit optimistic in that sense. Two things can work for us – one is our growth, which will be higher than the global average, and the second is when the oil prices come down, then obviously you will see appreciation bias again in the rupee. You can see the rupee going below 82. So, for the time being, it will be between 81.5 and 83.5.

While there is only that much we can do because much of the rupee’s weakness is only linked to the strong dollar index, but just wanted to understand whether you see RBI intervention now that we have significantly crossed that 82-mark?

The RBI has always said they will intervene only when there is undue volatility and there is too much volatility in a day. So they will come in when they see this kind of volatility coming in. I do not think they have any price range in their minds, probably they know it. I do not know, but what we have seen in the past is that they do not have any price in their mind and they have said this so many times, including governor Shaktikanta Das’ speech in the last RBI policy meeting. So I think they will keep a very close watch on what is happening but whether they will intervene or not, cannot be predicted.