HDFC Bank’s Bhaskar Panda on rising oil prices, rupee fall & bond market

“If oil remains as it is today and the index remains as it is today, there is not much hope for the time being. On the bond front, if oil remains higher and input prices remain higher – that is not only oil but if the prices of all commodities remain higher – that means inflation will probably overshoot the target in at least short term,” says , Senior V-P, HDFC Bank.

What we are seeing across the globe clearly is playing out in the currency markets. What do you make of the kind of rout that we are witnessing with the rupee hitting a record low to the US dollar?
The times are very uncertain and nobody is very certain about what is going to be the outcome in the short term at least. Therefore, that explains the volatility that we see in currency markets, in all the asset markets together and that actually brings us to a point where we need to see whether this level that is trading today is going to remain or we are going to depreciate much more than this and where it will stop. Nobody has an answer.

But I guess that since a lot of bad things are already priced in most of the prices right now except maybe our yields, probably we will see less depreciation going from here. Technically speaking, 77.19, 77.20 looks a little stable. Basically it may not break above that in this rally itself but the big question is where the oil price is going.

If oil remains as it is today and the index remains as it is today, there is not much hope for the time being. On the bond front, if oil remains higher and input prices remain higher – that is not only oil but if the prices of all commodities remain higher – that means inflation will probably overshoot the target in at least short term and that means obviously traders are expecting a little higher yields than it is today. That explains the higher yields.