homemarket Newscurrency NewsExpect 74.50 to the dollar rupee level to be maintained for quite some time, says Axis Bank
Expect 74.50 to the dollar rupee level to be maintained for quite some time, says Axis Bank
Even though dollar has been strong against emerging market currencies, it is weakening against the other G10 currencies, said Neeraj Gambhir, President Head-Treasury and Markets, Axis Bank.
The money market is witnessing a lot of action. After a long time the 10-year bond yields were at 6.07 percent. The rupee is also trading at the lowest level since October 2018, at 74 to the dollar.
At the back of these developments, would there be an intermittent rate cut by the Reserve Bank of India (RBI) is the big question. Neeraj Gambhir, President Head-Treasury and Markets, Axis Bank is of the belief that chances of the central bank moving ahead of Monetary Policy Committee (MPC) have diminished.
“After the Fed unscheduled rate cut, we have not seen any other central bank come out and do any monetary policy action. We have the European Central Bank (ECB) meet on March 12th and after that Fed on 18-19th. So, we will have to see what both of these central banks do in these meetings," he said, adding that we also have Bank of Japan meet on March 26.
With three major central banks meetings scheduled over the next two weeks. Therefore, the Reserve Bank would likely want to wait and watch and see what these central banks do, he said in an interaction with CNBC-TV18.
“There is a widespread expectation that Fed will again cut rates on March 18-19, 50 basis point rate cut is what is being expected. If that does materialize, then the probability of a rate cut by RBI in its scheduled meeting goes up quite a lot,” he added.
When asked about the rupee trajectory, he said, “This is a fairly volatile market and there are global factors, which are impacting. While on the one hand, we have seen crude oil prices come down, which is a huge positive for India's balance of payments, but it is also a global risk-off. Usually such kind of a downshift in the oil prices is very positive for the rupee but given the fact that we are in a global risk-off sentiment, the equity markets are selling off quite significantly.”
“The rupee has been trading weak and this has been in-line with what globally emerging market currencies are doing. Even though dollar has been strong against emerging market currencies, it is weakening against the other G10 currencies. So, it is a bit of a risk off which is playing out and that risk off as long as it continues, the rupee could potentially be further weakening," he said, adding that they do not expect a whole lot of weakening from here.
Expect 74.50 to the dollar level to be maintained for quite some time, he said.
First Published: Mar 9, 2020 12:54 PM IST
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