Dominique Strauss-Kahn, chief of International Monetary Fund, has suggested Indian government not to restrict the capital inflows too much because it could destabilize the confidence in the country. This is just another suggestion for India from the boss of Internal financial institution because they still think India needs their suggestion and guidelines all the time to strengthen the country’s economy.

Earlier, India’s Finance minister P Chidambaram had told the developed countries just to concentrate on their own problems and invest time to think for the solutions of the problems. He had said, on the sidelines of the annual meetings of the International Monetary Fund and World Bank, that the developed countries should stop lecturing the other growing economies what is right and what is wrong for these countries. New emerging economic giants such as India have been tired of being told what to do all the time.

Strauss-Kahn said, while addressing his first news conference after taking the charge of his new post as IMF managing director, that this was a good idea to enhance the transparency of the capital inflow into Indian market but restricting the capital inflow might not always be good.

He said:

The problem of this kind of thing is it may undermine the confidence in the Indian economy. It will have an influence certainly on capital inflows but not always a good influence. I think the Indian authorities should think over several times before implementing this kind of instrument.

Earlier, the Indian finance ministry had announced to take necessary steps just to ensure that continuous capital inflows could not push the Indian currency out of control. The SEBI, India’s stock market regulator, had recommended tightening investment rules by using the P-notes. The foreign investors, not registered in India, generally invest in to Indian market through the P-notes.

According to the report, the value of Indian currency has been jumped to a 10-year high on Thursday. The foreign investors have preferred investing into Indian markets because the U.S. Federal Reserve has reduced the interest rates.

On the question of appreciation of Indian currency against the US dollar, Strauss-Kahn said that this was the result of a lot of international capital inflow into India. He said that this is the reflection of strong economic fundamentals and foreigner investors’ interest in Indian market. Several multinational companies have increasingly planned to establish their offices in the country.