High CAD just Might Return

This refers to ‘Gold Import Curbs may Go as CAD Falls Dramatically’ (ET, Dec 16). As long as there’s demand, it will be difficult to restrict import through illegal channels. People will invest in gold as long as high inflation is seen and easy liquidity is available for the commodity. Though inflation cannot be controlled in the near term, the RBI may ban loan against gold jewellery by banks. If import curb is removed without bringing down inflation or reducing the appetite for gold, we may see uncomfortable CAD again.
- S KALYANASUNDARAM, Chennai (ET)