Finance Minister says inflation moderating

LONDON, June 27 (Reuters) Finance Minister Palaniappan Chidambaram said on Wednesday that central bank policy tightening and the rupee currency's strength had helped to moderate inflation to some extent.

''So far central bank actions have moderated inflation. The rupee rise has also helped moderate inflation to some extent,'' Chidambaram told reporters on the sidelines of a conference in London.

He said the intention for this year was to keep inflation at 4.0 to 4.5 percent which he said was the ''politically tolerant'' level.

India's central bank has raised interest rates five times in the past year to 7.75 percent to combat inflation pressures.

The rupee has strengthened about 9 percent so far this year against the dollar, creating a headache for exporters but Chidambaram said the currency's strength was a reflection of huge capital inflows into the capital.

''We don't believe in imposing capital controls on inflows.

We will keep an eye on the rupee but our policy is a well regulated market determining the exchange rate.'' Last week, data showed India's wholesale inflation fell to its lowest in 14 months at 4.28 percent in 12 months to June 9.

REUTERS DKS GC1718