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‘Emerging markets plan joint offshore forex intervention’

Finance ministry on Friday said that emerging economies need to work out a co-ordinated action plan.

Written by Express News Service | New Delhi |
August 31, 2013 2:17:44 am

Ahead of a meeting of the Group of 20 (G20) nations next month,the finance ministry on Friday said that emerging economies need to work out a co-ordinated action plan to quell speculation in overseas currency markets which is also fuelling the volatility in rupee.

“It is now time to stop,” Dipak Dasgupta,finance ministry’s principal economic adviser,said,referring to speculative behaviour 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,adding that Brazil and India can start the move. He said there had been correspondence among several countries,and were not just limited to BRICS nations 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.

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

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“There is no initiative like that,” Brazilian central bank spokesperson said.

Offshore markets developed to allow foreign investors to hedge on emerging-market currencies when exchange controls in those countries made it difficult to trade directly in domestic spot market.

Dasgupta said such markets had exerted pressure on 12 of the main emerging market currencies,including Brazil,China,India,Russia,South Africa,Turkey and Malaysia. He said that,acting together,even four or five members would have estimated international reserves of $1.2 trillion. With China,the total reserves exceed $6 trillion,he said.

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