Finance Minister P. Chidambaram signalled on Monday that cash would come easier for worried banks, giving a shot of confidence to depositors and panic-stricken investors hit by a global financial flu. The market saluted the statement with a 7 per cent surge in the benchmark Sensex.
The rupee reversed a slide from an all-time low of Rs 49.30 to the US dollar last Friday to close at Rs.48.26 as North Block officials and regulators worked overtime to stabilise markets and infuse cash for growth and honouring commitments, mirroring central banks across the world.
“We are working on more measures that will infuse liquidity, make credit intermediation smoother, and increase the confidence of depositors and investors,” Chidambaram said. “We hope to be able to announce them shortly.”
Almost on cue, late in the evening, banks got a bonus reprieve as Reserve Bank of India allowed them to trade in interest rate futures, something that would help them hedge against risks, stabilise markets and make trading profits.
Commerce and Industry Minister Kamal Nath added a rosy brush-stroke, saying foreign direct investment (FDI) would hit the target of $35 billion in the current year, despite global woes