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Capital flows likely to exceed $50 billion

The surge in capital flows, according to the Mid-Year Analysis prepared by the Finance Ministry, is fueling stock markets and putting pressure on rupee.

twitter-logo PTI   New Delhi     Last Updated: December 14, 2010  | 17:09 IST

The finance ministry on Friday indicated it will not intervene in the foreign exchange market even if capital inflows into the country touches $50 billion during the 2010-11 financial year.

"$50 billion - you could have around that. Inflows will continue according to me," Thomas Matthew, joint secretary in Ministry of Finance, told reporters on the sidelines of a conference on corporate governance.

Foreign Inflows during the April-September period stood at $37.4 billion.

On the possibility of government or the Reserve Bank of India intervening in the market to check surge in capital flows, Matthew said: "The Finance Minister (Pranab Mukherjee) has already said there is no need to interfere in the market."

The surge in capital flows, according to the Mid-Year Analysis prepared by the Finance Ministry, is fueling stock markets and putting pressure on rupee.

"The main implication of such large capital flows to India has been buoyancy in stock markets and appreciation of rupee vis-a-vis dollar," it had said.

The capital flows have remained volatile in the past couple of years. It went up to $108 billion in 2007-08 before nosediving to a mere $8 billion in 2008-09, mainly on account of the global financial meltdown.

The inflows, however, picked up during 2009-10 rising to $53.6 billion.

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