Chidambaram says U.S. Federal Reserve's statement misunderstood, calls for calm

Finance Minister P. Chidambaram on Thursday sought to calm stock markets in India after Federal Reserve Chairman Ben Bernanke suggested bond purchases could be scaled back if the U.S. economy improves.

Addressing a news conference here, Chidambaram said fears that the Federal Reserve would start reversing its U.S. monetary stimulus programme were being misunderstood in stock market and investor circles.

His statement, however, failed to prevent steep falls in domestic markets on Thursday.

The Nifty slumped more than 2 per cent, while the rupee fell to a more than eight-and-a-half-month low.

"We have been looking at what's been happening in the market. We think that the Federal Reserve Chairman Mr. Bernanke's statement has been misunderstood or misinterpreted," Chidambaram told media.

"If you look at the statement carefully, he has clearly indicated that he will continue with quantitative easing in the foreseeable future," he added.