The central bank may introduce more measures to contain inflation in its April 29 monetary-policy announcement, Finance Minister Palaniappan Chidambaram has said.
Yields on India's benchmark 10-year government bond held near the highest since June after the inflation report. The yield on the 8.24 percent note due in April 2018 was little changed at 8.18 percent as of 12:20 p.m. in Mumbai. The price was 100.40 per 100 rupee face amount.
The Reserve Bank of India on April 17 raised the so-called cash reserve ratio to a seven-year high of 8 percent from 7.5 percent. The move reduces the supply of money in the financial system by forcing commercial banks to park more money with the central bank.
Inflation in India has doubled in the last four months, a development which has lead the government to ban commodities exports and abolish import duties in an attempt to to safeguard domestic supplies and contain prices. During the last month import taxes on edible oils and pulses have been scrapped and the export of commodities like rice and cement has been banned.
India's Finance Minister Palaniappan Chidambaram said today that the Indian government will seek to maintain the nation's economic growth momentum whilst also taking steps to curb inflation. This ambition is laudible but very challenging to actually carry through, in my ever so humble opinion.
``Though the measures to contain inflation may result in some moderation in the economic growth, it is the endeavor of the government to sustain the current momentum of high growth with price stability,'' Chidambaram said in a written reply to a question in parliament today.
Foreign exchange reserves for the week ended April 11 increased by a modest $482 million to reach $312.367 billion, due to a rise in foreign currency assets, according to the Reserve Bank of India’s Weekly Statistical Supplement.
In the previous week, the foreign exchange reserves rose by $2.724 billion to touch $311.885 billion.
Foreign currency assets increased by $ 426 million to touch $ 301.820 billion. Foreign currency assets expressed in US dollar terms include the effect of appreciation or depreciation of non-US currencies (such as euro, sterling, yen) held in reserves.