Bernanake's statement misunderstood: Chidambaram

Says Indian market should read the situation correctly

New Delhi (PTI): Finance Minister P Chidambaram on Thursday sought to assuage the stock market, after it declined by over 350 points, by asserting that there was no need for any "nervousness" and the participants should read the situation correctly rather than be influenced by external developments.

"There is no need for any kind of nervousness. I am looking forward to June and the second quarter with much greater confidence. I think the Indian market should read the situation correctly rather than being influenced by something which is happening elsewhere", he said.

The Minister was reacting to sudden crash in Indian stock markets in response to a statement by Federal Reserve Chairman Ben Bernanke in which he had talked about scaling back of stimulus with improvement in economic conditions. "We have been looking at what is happening in the market.

We think that Bernanake's statement has been misunderstood or misinterpreted. If we read the statement carefully, he has clearly indicated that he will continue with quantitative easing in the foreseeable future at about $85 billion a month or so", Chidambaram said.

The Minister further said that quantitative easing is continuing in Japan and Europe and there have been no change whatsoever and the flows into India during May have been extremely copious.

Chidambaram said the economic situation in India has been improving with decline in wholesale and retail inflation. Admitting that certain numbers coming out of China were disappointing FM said, "these are factors that are peculiar to the China market and the Japan market, (and) they have no relevance at all to the situation in India."

No need to panic over rupee fallA

New Delhi: Even as rupee fell below 56-level against US dollar on Thursday, top adviser to Finance Ministry Raghuram Rajan said there is no need to panic as RBI takes decisions on whether to intervene in forex markets or not to stabilise the local currency.

"We are not the worst, but we are also not the best either in terms of depreciation...I won't say it is out of sync with what is happening in other countries... There is no panic-based need for new measures (on rupee)... I don't see any reason for apprehension," Chief Economic Adviser in the Finance Ministry Rajan said.

He said euro has also depreciated against the dollar and so is Japanese yen. The rupee today fell below 56-level against dollar during intra-day amid the US currency's sustained gains against major rivals overseas. Rajan said the RBI takes decision on market intervention with regard to rupee movement.