In a time when all steps by government and Reserve Bank of India‘s to stem the rupee fall seems to be failing, Jamal Mecklai, CEO of Mecklai Financial Services in a very satirical way suggested the Finance Minister and RBI governor to visit Tirupati temple and liquidate it‘s gold assets to save sinking rupee.
At a time when all steps by government and Reserve Bank of India's to stem the rupee fall seems to be failing, Jamal Mecklai, CEO of Mecklai Financial Services sarcastically suggested the Finance Minister and RBI governor to visit Tirupati temple and liquidate it’s gold assets to save sinking rupee.
"Tirupati by reports has well over thousand tones of gold, which is just sitting there. Now if they were to deposit 500 tonnes of gold with State bank of India, lets say they get 2 percent interest, that's Rs 3000 crore here," Mecklai told CNBC-TV18.
Although, Mecklai's solution may come across as ironical, a divine intervention is definitely sought by market participants after the rupee today breached the psychological 63 mark, losing 2.5 percent, a biggest single day fall in a decade.
Mecklai essentially hinted at leveraging the country’s huge gold assets to rescue rupee
Below is the verbatim transcript of the interview
Q: We are talking about 63.13, levels we haven’t seen in the last 18 years and there doesn’t seem to any sense of direction about where we can finally find some stability in the rupee market?
A: The answer is very simple. I have told everybody what they have to do. Finance Minister and governor have to go to Tirupati. A) They have to pray, and B) which is very important is they have to talk to the trustees to deposit some part of their gold in State Bank of India. It is the only solution. The truth is why are we in this mess? Because everybody believes India doesn’t have enough money. We spend more than we earn, our fiscal deficit is very high, so too the current account deficit (CAD) is very high. Now the truth is we happened to have 30,000-35,000 tonnes gold, which valued at today’s prices is about USD 1.5 trillion, now those are assets, that is money that we own, not like our foreign currency reserves, those are also foreign currency assets. So actually if you do the balance, Mr. Chidambaram says we are USD 20 billion short. We have got hundreds of times of that, but ofcourse that is locked up. So very good, over the years many times the government has tried to get it unwound and they haven’t been able to.
Now Tirupati by reports and I don’t have this actual numbers has well over a 1,000 tonnes of gold, which is sitting there. Now if they were to put a 500 tonnes of gold on deposit in State Bank of India, let us say they get two percent interest that is Rs 3,000 crore a year, which trustee can pass that up.
Q: What you really expect as far as the levels are concerned tomorrow. Do you expect any kind of a pullback? Do you think it is the kind of precipitous fall that we saw in the last 15 minutes? What do you expect tomorrow?
A: I am telling you like everyday anything can happen, as the market is so thin anything can happen, people are getting slipped out for good reasons and I am saying that – infact somebody asked me what you would do. I said if you are losing money, cut your losses, if you think you are willing to risk a little more put a little more money on the table and if you get any sort of pullback cover unless ofcourse you read in the papers tomorrow morning or maybe the day after that flights to Tirupati were full and then look out. Let me tell you that is the only way that the rupee can actually turnaround.
Unlock 75% more savings this festive season. Get Moneycontrol Pro for a year for Rs 289 only.
Coupon code: DIWALI. Offer valid till 10th November, 2019 .