Rupee bound to rise on strong growth: Chidambaram

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The comment pushed the rupee towards its strongest level in nearly a decade, but the rise was halted by suspected central bank intervention, dealers said.

"With the economy growing at an average rate of 8.6 percent, the rupee is bound to strengthen," Finance Minister Palaniappan Chidambaram told a gathering of members of the ruling Congress Party.

"One must learn to become competitive, learn to cut costs and learn to innovate," he added.

The rupee, which has risen about 12.6 percent this year on robust capital inflows, ended steady at 39.31/32 per dollar with the central bank actively buying dollars after it rose to 39.22 immediately after Chidambaram's comments, dealers said.

"One must learn to trade in the environment, where the rupee will strengthen. What is causing concern is the rapid appreciation of the rupee," Chidambaram said.

Exports were still growing 18 percent, which was no mean achievement, he said.

"Merely because the profits are down does not mean we should present an alarmist picture," he said. "We have given support and it will be completely wrong for exporters to boost bottomlines by retrenching jobs."

Chidambaram said India's income per person was expected to rise to $1,000 at current exchange rates by the end of the fiscal year in March 2008 on the back of 9 percent economic growth.

Per capita income stood at $797 in 2006/07, data from the central bank's Web site: www.rbi.org.in showed, nearly double from $460 in 2000/01.

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