NEW DELHI (Reuters) - The Reserve Bank of India's (RBI) liquidity measures to curb volatility in the forex market is likely to help moderate inflation, Finance Minister P. Chidambaram told parliament on Friday.
Last month, the central bank engineered an increase in money-market interest rates in an effort to give investors in short-term rupee debt an incentive to keep their money in India.
"Liquidity tightening measures though aimed at check(ing) speculation in the currency market, would also have salutary impact of inflation moderation," Chidambaram said in a written reply.
(Reporting by Rajesh Kumar Singh)
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