India better prepared to deal with US Federal Reserve tapering: P. Chidambaram

P ChidambaramP Chidambaram spoke to Reserve Bank of India Governor Raghuram Rajan on Thursday morning to discuss the Fed tapering.

India is better prepared to deal with any consequences of the US Federal Reserve's move to reduce monetary stimulus, Finance Minister P. Chidambaram said in a statement on Thursday, that has supported inflows of cash to emerging markets.

After agonising investors for months, the US Federal Reserve decided on Wednesday to trim its bond buying by $10 billion to $75 billion a month as a modest step and one the US economy could well withstand. Crucially, the US central bank softened the blow by making its forward guidance even more dovish.

"(The) government is of the view that the markets had already factored in the US Federal Reserve's decision and therefore is not likely to be surprised by these moderate changes," P. Chidambaram said in a written statement released by his office.

Worries over the US Fed's possible tapering had triggered massive capital outflows between May and September from emerging markets.

Saddled with hefty current account and fiscal deficits, India looked the most vulnerable. The rupee went in a free fall, losing as much as 20 percent against the dollar before recovering. This prompted India to unleash a slew of measures to bolster its forex reserves and rein in the current account gap.

Chidambaram also spoke to Reserve Bank of India Governor Raghuram Rajan on Thursday morning to discuss the Fed tapering, the statement added.

Please read our terms of use before posting comments
TERMS OF USE: The views, opinions and comments posted are your, and are not endorsed by this website. You shall be solely responsible for the comment posted here. The website reserves the right to delete, reject, or otherwise remove any views, opinions and comments posted or part thereof. You shall ensure that the comment is not inflammatory, abusive, derogatory, defamatory &/or obscene, or contain pornographic matter and/or does not constitute hate mail, or violate privacy of any person (s) or breach confidentiality or otherwise is illegal, immoral or contrary to public policy. Nor should it contain anything infringing copyright &/or intellectual property rights of any person(s).
comments powered by Disqus