India to press for dialogue to resolve currency war

Gyeongju (South Korea), Oct 21 (PTI) India is likely to
press for intensive engagement to amicably resolve the
currency war, mainly between the US dollar and Chinese yuan,
at the two-day meeting of G-20 finance ministers and central
bank governors beginning here tomorrow.
Indian Finance Minister Pranab Mukherjee, who is heading
the Indian delegation to the ministerial meeting, will also
hold separate consultations with the finance ministers of
other BRIC nations, namely Brazil, Russia and China, on
wide-ranging global economic issues, sources said.
Mukherjee had earlier said, "My approach is that we
should try to engage the countries into negotiations and build
up a consensus through which the matter (concerning currency
war) could be resolved."
He had also stressed that such issues "cannot be resolved
through confrontation... and we should engage in the process
of building up consensus."
While the US wants China to allow the yuan to appreciate
in line with market forces, the Chinese government is
resisting the move, as it would hurt the country's exports.
The currency war has prompted some other countries, especially
Japan, to weaken their currencies by pumping more funds into
the market.
India, which has witnessed about 5.5 per cent
appreciation of the rupee against the dollar since January,
has not taken a stand on the issue and wants the matter to be
sorted out without confrontation in the interest of global
financial stability.
Meanwhile, a US official said in Washington that when
large economies with undervalued exchange rates act to keep
their currencies from appreciating, it compels other countries
to do the same, setting off dynamic of competitive non-
appreciation.
"It's bad for the system and it's bad for all of us. It
imposes an unfair burden of adjustment on other emerging
markets that are running more flexible exchange rate regimes,"
he added.
In addition to currency war, the G-20, which is a club of
developed and emerging economies, will also deliberate on
issues like quota reforms in the International Monetary Fund,
protectionism, the global economic situation and a framework
for strong, sustainable and balanced growth.
The ministerial meeting will be followed by G-20 summit
to be held on November 11-12 at Seoul, which is likely to be
attended by global leaders including Indian Prime Minister
Manmohan Singh, among others.
US President Barack Obama, who will visit India in early
November, is also expected to attend the G-20 Summit, which is
being held in an Asian country for the first time.