'Volatility new normal; RBI to curb rupee swings, not its levels'

The sudden tariff announcement caught Arup Rakshit, group head treasury at HDFC Bank, off guard, but the rupee’s appreciation did not. In a conversation with Christina Titus and Mahesh Nayak, Rakshit says it is too early to draw conclusions from the Indo-US deal. Foreign portfolio investors are unlikely to return to India until the currency stabilises, and he does not expect the rupee to appreciate meaningfully beyond current levels. Excerpts:

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The sudden tariff announcement caught Arup Rakshit, group head treasury at HDFC Bank, off guard, but the rupee’s appreciation did not. In a conversation with Christina Titus and Mahesh Nayak, Rakshit says it is too early to draw conclusions from the Indo-US deal. Foreign portfolio investors are unlikely to return to India until the currency stabilises, and he does not expect the rupee to appreciate meaningfully beyond current levels. Excerpts:

Were you surprised by the way the rupee moved? Was it a knee-jerk reaction?

I wouldn’t call it a knee-jerk reaction. If tariffs were going to be cut — and cut so sharply in India’s favour — the rupee had to react. I expected it to open around 90.40, which it did. I don’t see it appreciating too much beyond this. It closed at a level that I anticipated.

Any thoughts on the Indo-US tariff deal?

It’s too early to draw conclusions. The devil is in the details. We will know more once the full trade agreement is released.