ET Now In a chat with ET Now, Ashok Gautam, Senior VP & Head-Global Markets, Treasury, Axis Bank, shares his outlook on treasury. Excerpts:
ET Now: Where is it that you see the full year current account deficit coming in at?
Ashok Gautam: I will peg the number at around 2% for the year. The Q1 CAD came out to be around 1.7%. There has been a pick-up in imports, wherein gold makes a significant contribution. Since we are an economy with import requirements, therefore, some of these numbers also indicate that the economy is on an up move. However, the capital inflows in the market till August were to the tune of 19.4 billion. So, even though CAD, on a year on year basis, may be between 2 and 2.2%, we will be on a good footing.
ET Now: Should we perhaps brace ourselves for shocks from FII outflows, largely on account of higher reserves?
Ashok Gautam: FII outflows will be the result of the interest rate cycle going up in US, which we believe would happen somewhere between March and June of the next year. We all have to brace ourselves to meet that challenge. Various steps have been taken by the Reserve Bank of India and the government over a period of time.
However, we must all be very comfortable with the strength of our reserves and the likely inflows which will counter any move triggering a dollar outflow from the country. Therefore, it is going to be a well-balanced story and we will not see a run like the last time when the rupee weakened without any upside in view. There is nothing to worry.
ET Now: Internally at Axis Bank, what kind of growth are you pencilling in for full year?
Ashok Gautam: The first quarter numbers have come out at around 5.7%, but overall, on a full year basis, we would be somewhere between 5% and 5.3%. The crude oil prices have cooled off, and Brent is moving somewhere between Rs 101 and Rs 103. Some time back, when there were tensions in the Middle East, the Brent prices have gone up to Rs 113. Therefore, the prices that have now come down will also start showing some effect in the numbers, coming in going forward.
Moreover, the sowing season was delayed because of a deficit of 17% to 18% in the normal monsoon. Now, last year there was a growth of 4% in the agriculture output, and this year it would be around 0 to 1%, though there will still be some kind of growth. Therefore, ultimately this will also have some impact on the growth number. I would still go with 5% to 5.3% for this year.
ET Now: Where is it that you see the full year current account deficit coming in at?
Ashok Gautam: I will peg the number at around 2% for the year. The Q1 CAD came out to be around 1.7%. There has been a pick-up in imports, wherein gold makes a significant contribution. Since we are an economy with import requirements, therefore, some of these numbers also indicate that the economy is on an up move. However, the capital inflows in the market till August were to the tune of 19.4 billion. So, even though CAD, on a year on year basis, may be between 2 and 2.2%, we will be on a good footing.
ET Now: Should we perhaps brace ourselves for shocks from FII outflows, largely on account of higher reserves?
Ashok Gautam: FII outflows will be the result of the interest rate cycle going up in US, which we believe would happen somewhere between March and June of the next year. We all have to brace ourselves to meet that challenge. Various steps have been taken by the Reserve Bank of India and the government over a period of time.
However, we must all be very comfortable with the strength of our reserves and the likely inflows which will counter any move triggering a dollar outflow from the country. Therefore, it is going to be a well-balanced story and we will not see a run like the last time when the rupee weakened without any upside in view. There is nothing to worry.
ET Now: Internally at Axis Bank, what kind of growth are you pencilling in for full year?
Ashok Gautam: The first quarter numbers have come out at around 5.7%, but overall, on a full year basis, we would be somewhere between 5% and 5.3%. The crude oil prices have cooled off, and Brent is moving somewhere between Rs 101 and Rs 103. Some time back, when there were tensions in the Middle East, the Brent prices have gone up to Rs 113. Therefore, the prices that have now come down will also start showing some effect in the numbers, coming in going forward.
Moreover, the sowing season was delayed because of a deficit of 17% to 18% in the normal monsoon. Now, last year there was a growth of 4% in the agriculture output, and this year it would be around 0 to 1%, though there will still be some kind of growth. Therefore, ultimately this will also have some impact on the growth number. I would still go with 5% to 5.3% for this year.
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