India won't curb foreign inflows, says Pranab
India will not impose curbs on foreign institutional investments to check the rupee's rise, Finance Minister Pranab Mukherjee said on the eve of the International Monetary Fund's annual meeting on Thursday.business Updated: Oct 08, 2010 20:50 IST
India will not impose curbs on foreign institutional investments to check the rupee's rise, Finance Minister Pranab Mukherjee said on the eve of the International Monetary Fund's (IMF's) annual meeting on Thursday.
"I don't think that foreign capital inflow has distorted market sentiment to merit the imposition of curbs on foreign institutional investments," the finance minister said, adding, the Reserve Bank of India (RBI) can intervene if and when needed.
"We want the parties to solve the situation through consensus and not confrontation," Mukherjee said on India's stand on fears of the world's biggest economies resorting to devalution to boost exports.
The US and European countries want China to unshackle the yuan and let it find its market-dictated level, which is expected to be higher than its present artificially depressed value.
China keeps its currency artificially low to attract exports. Most other currencies — including the rupee, to an extent — are subject to fluctuations depending the state of their respective economies.
The currency issue is likely to dominate the current round of talks at the IMF annuals.
He, however, warned of international trade imbalances. "For sustained growth and stability, global structural imbalances have to be addressed, sooner rather than later."
"The huge build up of reserves in some countries and deficits elsewhere, massive trade surpluses in some and trade deficits in others are not sustainable."
On inflation, he said that the government was hoping to rein in prices. "We hope to bring down the inflation rate to 6 per cent by the end of the current fiscal year."