Exclusive: Emerging markets plan joint offshore FX intervention - Indian official

Fri Aug 30, 2013 9:40am EDT
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By Manoj Kumar

NEW DELHI (Reuters) - India is liaising with other emerging-economy countries on a plan to co-ordinate intervention in offshore currency markets blamed for worsening a currency rout over the past three months, a senior Indian finance ministry official said on Friday.

The idea of major emerging economies taking action together to offset the impact of a stronger U.S. dollar as the Federal Reserve reins in its stimulus had also been floated in June by Brazilian President Dilma Rousseff in a phone call to her Chinese counterpart.

The leading emerging market nations that form the BRICS groups - including Brazil, Russia, India, China and South Africa - fretted about the global turbulence at a July G20 summit in Moscow, but no action materialized. G20 leaders are due to meet in St Petersburg next week.

"It is now time to stop," Dipak Dasgupta, the Indian finance ministry's principal economic adviser, told Reuters, referring to speculative behavior in offshore markets he said was damaging the stability of the world economy.

"It is going to happen in a matter of days rather than weeks," he said. "Brazil and India can start the move."

He said there had been correspondence among several countries on the plans in the last few weeks and predicted that action would now come quickly, but he declined to share specific details of the discussions.

Dasgupta said the conversations were not limited to BRICS nations. It was not immediately clear how many takers there were for such a proposal from other major emerging economies.

However, Brazil's central bank said it was not currently participating in any planning for co-ordinated intervention in offshore markets.   Continued...

A man watches television inside his currency exchange shop in New Delhi August 30, 2013. The Indian central bank likely sold dollars via state-run banks starting at around 66.60 rupee levels, two traders told Reuters on Friday. The rupee recovered sharply to the day's high of 66.16 per dollar following the intervention and was trading at 66.28/29 at 0925 GMT, stronger than its close of 66.55/56 on Thursday. The unit, however, is still on course to post its biggest monthly loss ever. REUTERS/Mansi Thapliyal