Credit Agricole’s Kowalczyk Says RBI May Try to Curb Rupee Drop

Dariusz Kowalczyk, a senior economist at Credit Agricole CIB in Hong Kong, comments on the Indian rupee in a telephone interview.

The rupee declined 1.6 percent yesterday to 52.1450 per dollar in Mumbai, according to data compiled by Bloomberg. It touched 52.1550, the weakest level since dropping to a record low of 52.18 in March 2009.

“At the current level, I would not go either way on the rupee as I am afraid of the RBI. The rupee at Lehman-lows is bad for inflation, so I think the RBI could intervene.

“Having said that, this view seems to be toned down by statements that the central bank doesn’t have the firepower. So there is potential for the record low to be breached.

“If this level is broken convincingly, by about half a percentage point or more, then I would sell the rupee as it could fall to 54 per dollar before the end of this year.”

To contact the reporter on this story: Jeanette Rodrigues in Mumbai at jrodrigues26@bloomberg.net

To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net.

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