No sufficient policy action from RBI yet to stem rupee’s slide, says Jahangir Aziz of JP Morgan

Indian rupee opened higher against the US dollar on Tuesday after a record low closing in the previous session.

Jahangir Aziz, head of emerging market Asia economic research at JP Morgan, spoke to CNBC-TV18 about the weakness in rupee and shared his outlook on the currency.

“I think the rupee depreciation is a reflection of fundamentals ... I don’t think the rupee has cheapened sufficiently for people to start looking at rupee positively, I think that requires the fundamentals to be turning around and I don’t think that has happened,” Aziz said.

“Until unless we see the current account deficit (CAD), the fiscal deficit and interest rates turn the other direction, I don’t think that you can stop waiting for the rupee to find a bottom simply because it is depreciating. If you look at in terms of nominal effective rates or trade relative rates, the rupee basically has depreciated along with all its competitors,” he added.

Regarding the central bank's rate hike trajectory, Aziz said, "I would have thought that by now, the Reserve Bank of India (RBI) would have shown sufficient urgency to start raising rates now. If RBI plans to raise rates in October, why not raise it now because raising it now will be far more effective than waiting till October 3 when things could have changed quite dramatically. I am not sure they should raise rates, that is up to them but if they are planning to raise on October 3, September 12 is just as good or even better if they want that rate hike to be effective in stemming the rupee’s slide."