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  • Rupee Appreciation Not Abnormal: Pranab

    Published on October 22, 2010

    Finance Minister Pranab Mukherjee has said on Friday that huge FII inflow reflects foreigners confidence in Indian growth story and is not a matter of concern as of now since the appreciation in the value of rupee is not abnormal.

    “The rupee appreciation is not abnormal. As and when RBI feels that intervention is necessary, they start intervening. But I’m not very much worried because our situation will not be of that level,” Mukherjee said ahead of G-20 Finance Ministers meeting in Gyeongju on Friday.

    RBI had intervened in markets last week to restrain a sharply appreciating rupee.

    The Finance Minister said that if rupee continued to appreciate for longer, exports would be impacted.

    “Export is definitely affected if it continues for a longer period of time,” he said.

    Indian rupee has appreciated by around 5 per cent this year so far, to stand at around Rs 44.36 against a dollar.

    The Finance Minister said FII inflows reflects momentum in growth of Indian economy.

    “One of the reasons is that when the recovery process in industrial world is slow, naturally those who have investible resources would like to come to emerging markets and confidence of Indian economy has allured the investment,” he said.

    Indian economy grew by 8.8 per cent in the first quarter of this fiscal, while major countries in Europe and the US are struggling to revive from the global financial crisis.

    FIIs have poured in record over Rs one trillion in Indian stock markets in the current year so far.

    Mukherjee favoured dialogue to resolve the issues of currency war, particularly between US dollar and Chinese Yuan, instead of confrontation.

    He said he was not sure whether somebody will raise the issue at G-20 Finance Ministers meeting, and that India’s stand would depend on how the issue was raised at the meeting.