Reddy, Chidambaram discuss rupee appreciation

New Delhi, July 10 (UNI) Ahead of the Central Bank's monetary policy review, RBI Governor Y V Reddy today met Finance Minister P Chidambaram here and discussed measures to tackle the problems arising out of almost secular appreciation of the rupee, inflation and interest rates and using foreign exchange reserves for funding of infrastructure projects.

At the meeting at North Block Office of the Finance Minister, issues pertaining to the the Annual credit policy review slated for July 31, 2007, also came up for discussion.

The two leaders as well as RBI Deputy Governor Rakesh Mohan and Chief Economic Advisor were closeted for more than an hour. They went into the parametres under which the monetry policy review was taking place.

The rupee has appreciated by around 10 per cent from January to June this year and the worry is that this is happening in a scenario where some currencies are depreciating.

While inflation rate has slid to 4.13 per cent, the hardening of international crude prices once again has been a source of worry. It is widely expected that prices of diesel and petrol will be hiked soon.

While exports have been put at a disadvantage due to the rising rupee, exports of certain sectors have taken a bigger hit. These include textiles, Information Technology, leather, gem and jewellery.

Both Dr Reddy and Dr Mohan declined to answer any questions relating to their meeting.

UNI