Currency rate adjustments best left to sovereign govts

Paris (PTI) In a clear signal that it is not
willing to join the US-China currency war, India on Saturday
said the foreign exchange adjustments is best be left to the
sovereign governments.
Underlining that currency rates should be driven by
market forces "as far as possible", Finance Minister Pranab
Mukherjee said "the best course would be to leave it to
sovereign governments to decide what course of action they
will take. We take that position".
Mukherjee's comments at the G20 Finance Ministers'
meeting here comes against backdrop of the US pressurising
China to revalue its currency yuan.
"At the same time every country has its own problems and
they will have to address those issues. You cannot sit on
value judgement from outside," Mukherjee said.
His remarks quashes speculations that India might join
Brazil and the US to pressurise China to revalue yuan.
The foreign exchange value of yuan is not determined by
market forces. It is alleged that an undervalued yuan leading
to global trade imbalances as Chinese exports are becoming
cheaper.
Fred Bergsten, the Director of the Peterson Institute for
International Economics, estimates that a 20-40 per cent
appreciation of yuan would result in a USD 100-150
billion improvement in the US trade deficit and would generate
700,000 to 1 million jobs in the US.
Recently, a new legislation was introduced in the US
Senate that provides additional tools for the administration
to address currency manipulations by countries such as China.
The proposed law would ensure the Federal government is
equipped to respond on behalf of American workers and
manufacturers by imposing countervailing duties on subsidised
exports from countries like China.
US Senator Sherrod Brown recently said that "China's
currency manipulation creates a substantial cost advantage for
Chinese manufacturers over American manufacturers".