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Rupee crisis: Chidambaram holds meet with FIIs, bankers

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Finance Minister P. Chidambaram on Saturday held closed-door meetings with foreign institutional investors (FIIs) and top bankers in an attempt to reach out to market participants in the wake of the rupee crash.

Earlier this week, Mr Chidambaram had said that that there is a need for communicating the decisions of the government in an effective manner to the markets and the stakeholders.

Mr Chidambaram discussed the current economic situation with fund managers from Merrill Lynch, Temasek, HSBC, Citi and Deutsche among others.

Since May 22, FIIs have pulled out over $12 billion from Indian bond and equity markets. That was the day when Federal Reserve Chairman Ben Bernanke hinted at scaling down bond buybacks sooner than expected. These outflows raised concerns about financing of India's record current account deficit and put pressure on the rupee.

The meeting assumes importance as it comes against the backdrop of continuing flight of capital, especially after RBI put restrictions of capital withdrawal by corporates and individuals last week, which triggered concerns among overseas investors that the government was on the verge of a throwback to the early 1991 crisis, when stiff capital control was imposed due to the balance of payment crisis.

The rupee hit a series of record lows in the week, falling as much as 65.56 to a dollar on Thursday, making its Asia's worst performer so far in 2013.

However, the rupee posted its biggest intraday gain in nearly a year on Friday, a day after Mr Chidambaram said that the rupee was "undervalued" and the current account deficit could be smaller than the previously estimated $70 billion.

Before meeting FIIs, Mr Chidambaram met India's leading bankers, including ICICI Bank's Chanda Kochhar who told reporters that the meeting was mainly to seek ideas and suggestions on what can be done about capital inflows.

"It was a very good and positive meeting," she added. HDFC Bank's Aditya Puri and State Bank of India's Chairman Pratip Chaudhuri were among the bankers who attended the meeting.
 
Banking Secretary Rajiv Takru and Economic Affairs Secretary Arvind Mayaram also attended these meetings.
 
 (With inputs from PTI)

Story first published on: August 24, 2013 12:39 (IST)

Tags: Indian rupee, Rupee dollar, USD INR, Chidambaram


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