How much longer the global situation is going to take a toll on the rupee is not known, says Jamal Mecklai, CEO, Mecklai Financial Services.
Talking to CNBC-TV18, he says the government and Reserve Bank of India (RBI) should have come out with a slew of stringent measures to curtail the fall in the currency. Action taken has been only restricted to dollars or gold, he says. Below is the edited transcript of his interview with CNBC-TV18: Q: What do you think now is the way forward? Would it not be difficult to defend 60 for the Reserve Bank having let it go? A: Without question. Why are we talking about the 60 levels. The crisis,if you call it, was triggered by global events. Today's movement was really local because other currencies did not fall, equities did not fall etc. The real issue is we don't know how much longer the global situation is going to put pressure on the rupee. If employment figures are very good for the US, and there is a lot of nervousness in the global market, anything can happen to the rupee. The fact is that intervention is going to have marginal impact. Suddenly opening up gates to try to get more money in is not going to have any impact in the short term. I think what is needed is prudence. My business is risk management, okay, maybe it is not crisis. The government and Reserve Bank of India (RBI) should have come out with a slew of actions. The actions taken, to my mind, have to be only related to dollars or gold whatever. The actions have to be things that maybe unpopular. But the point is, we can’t do anything in the middle of a storm. You do what you can do. So, when the storm stops you are stronger. Q: At this point in time you think that you can’t throw any sand on the wheels except through cutting the net open positions of banks or something as drastic as that. A: I guess they could do that. That is addressing symptoms, not the issue. Q: What do you expect policymakers to do? A: Some of the things the government can do are going to be unpopular, but they need to do it. They should do things to just cut subsidies and they should cut interest rates. I am not saying raise interest rates; I am saying cut interest rates. Q: Thursday is a gap-down opening. Do you have any levels in your mind? It closed at the lowest point of the day. A: You can’t be sure of that. Markets do all sorts of things.Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
