1. Since past few trading sessions, USD/INR seems to have broken down from its tight trading range set up since 2nd half of August 2009. According to you what are the factors responsible for this kind of movement?

Rupee movement is very much linked with both domestic and overseas factors. If we look at the Rupee movement since 1st August onwards, we have seen the strong level at 47.41 of 4th August, and weaker level at 49.20 on last 2nd September.   Since 2nd September, Rupee has almost recovered by 70 paise.  The move of every one factor, whether domestic or overseas changes path of the rupee, which is indeed a good sign that the participants in FX market look several factors to consider Rupee trade.  In recent past, a new factor, “Risk Aversion” is added which only safeguard the interest of the participants.  Main factors now account for USD/Rupee value trade are: fundamentals; economic, trade [Import / Export] figures, equity market move, FII’s views in our equity market, and last but none is “Risk Aversion”.   Yes during August, one more factor also worked which was “Monsoon’.  On account of scanty rain all over India, this factor also pressured on Rupee and hold on Rupee appreciation.

2. What would be the impact of inflation on interest rates in near term? Do you think, on a global level, India will take a lead in moving towards higher interest rate regime?

Yes, in all probabilities India may lead move for higher interest rate.  Let us look at CRR, which is at 5% since 17th January 2009 [high was at 9% on  30th August 2008], and SLR at 24% since 8th November 2008.  With all probabilities in near future CRR may rise to 6.00% with gradual increase by 25 to 50 BPs, and SLR once again may find its original comforts at 25%.  Reason why RBI will be prompted to higher the level is to restrict excess money supply in the market [M3] and further increase in the Inflation.  The excess liquidity in the financial markets is estimated around Rs.300,000 crore rupees, which are equally parked with Rev.Repo with RBI and Mutual Funds.  The rise in Inflation which was at [minus] -1.74% as on 13h August 2009 has climbed to [minus] –0.21 on3rd September 2009 is an alarming bell to Govt., to check further rise in inflation.  The rise in circular is also attributed on account of deposit growth at 21.5%, whereas the credit growth stands around 15.0%.   Bankers are also uncomfortable that there are no takers of the credits from them and those who have already sanctioned with are not lifting.

3. What are your views about the utility of Currency Futures platform? Would you recommend the Corporates to route at least their partial exposure through this platform?

A very safe and sound platform to adjust and or minimizing losses if incurred on account of normal forward contract transaction. Currency Futures contracts are simply adjusted with receipt of profit and payment of losses and no physical delivery take place.  Yes, this additional tool should be well utilized by the Corporate to increase their profitability and minimizing losses in other exchange trade related transactions.

4. Many people think dollar would lose its sheen as a reserve currency. Do you agree?

Yes there are all possibilities, but it will take another 30/50 years.  One should not     forget that US is the largest holding Gold Reserve, inner faith on the currency on account of the position of the US FED accountability and US administration, and most important investors faith on the US currency to avoid any risk aversion.

5. What are your derivations from the recently announced Foreign Trade Policy (FTP) and its short term and long term impact on the Indian Rupee?

Nothing new one can expect from the Ministry of Commerce in as much as the Ministry has nothing in their hand surplus to offer to the trade and commerce.  However, within all means the Ministry has tried to offer very best to the EXIM community.   Never the less, the policy is surely accounted with “Higher Support for Market and Product Diversification.     Long run Export from India will rise and will strengthen INRupee.

6. Any view you would like to share on Indian rupee and what trends our readers should watch out for?

With all consideration in relation to basic, fundamental, Government Policy, economy and political scenario and last but not the least, partial recovery in shortfall of monsoon will give some boost to the exports, and investment scenario in Indian equity and investment through FDI route will put  INRupee on fast appreciation.   RBI intervention in moping up excess supplies of foreign currencies from the market will also be less, because Indian financial markets are having excess rupee supply and any such action by RBI moping of excess supplies of foreign currencies will increase the rupee supply in the market.  INRupee during September I look at 48.00 and 49.00, by December between 47.25 and 48.20 and by March 2010 between 46.00 and 47.00 level.