ET Now: What is your sense? We were talking about maybe a couple of months back when you spoke about the distinct possibility of the rupee knocking at the doors of 55. We are here now. What do we do from hereon?
Moses Harding: In fact, as I have been saying, nothing is going good for the rupee, be it from political side or economic side or monetary side. That has impacted the flows into capital account. That has also impacted the forward market which has gone into demand driven mode. So no supplies from the forward market. So with all these negative cues in place, rupee depreciation continues, but the speed at which it has taken out 55 and is threatening to move towards 56-57 is what really is worry for stakeholders and a big concern for the RBI.
ET Now: How much can the RBI really do to stem this fall because while a part of it is fundamental, a part of it is also driven by what is happening with currencies across the region and global risk aversion that is coming in with the dollar getting strong?
Moses Harding: RBI measures so far have been ineffective in the sense that it is unable to pull in supplies. They have artificially tried to arrest demand into market and forcibly pull in supplies. But given the pent up underlying demand, these lead and lag measures are not proving effective and not considered sufficient to arrest the rupee fall and bring in a trend reversal and the worst case is that dollar is now gaining against the major currencies. The dollar game against major currencies is more appreciable than rupee than dollar in a correction mode. So things are looking bad and probably RBI might look at more operative structures and probably roll out bonds.
ET Now: Do you think we knock on the doors of 55.5 possibly even 56 within the next one month?
Moses Harding: Next immediate support for the rupee is 55.25. If that goes, then we see 56.75 to 57.
ET Now: Do you believe this would happen within the next one month?
Moses Harding: The rupee is down more than 25% since July. It is a kind of devaluation of the currency. Given the underlying momentum, it might even without RBI support, it might happen much earlier than that.