New Delhi, Dec. 31: The first meeting of the newly set up Financial Stability and Development Council, dubbed India’s super-regulator, discussed the currency wars in the global economy.
Sources said the meeting of the top financial sector regulators, chaired by finance minister Pranab Mukherjee, took stock of the competitive devaluation of currencies that was affecting global financial flows and trade.
The rupee is currently trading at 44.7 to the dollar, up 4.1 per cent year-on-year. It had touched a low of Rs 52.06 to the dollar some 18 months back. The appreciation of the Indian currency has hit its export competitiveness, hitting infotech and textile firms.
Officials said India would not join the “currency war” being waged in forex trading rooms across the globe. However, they added that the government and the RBI would certainly try to protect export markets by checking excessive volatility in the rupee value vis-a-vis the major currencies.
A finance ministry statement on the meeting said, “It was felt that currency issues, as is being played out, could have implications for India. The effort to keep the value of currencies artificially low could have an adverse impact on the competitiveness of Indian companies both within and outside the country. If nations adopted protectionist measures, it could have serious implications for the world economy as a whole.”
“We had a very positive and constructive meeting,” Mukherjee told reporters after the hour-long meeting.
Finance ministry officials said, “The meeting assessed the signs of economic recovery in the West and came to the conclusion that 2011 could see improvement in the world economy. The US could see better growth in 2011. The EU could also see positive growth though the sovereign debt crisis and woes of some nations are a matter of concern.”
Officials said besides the global economic recovery process, the prevailing economic situation in India was discussed, including concerns over high domestic inflation and widening current account deficit.
Source: www.telegraphindia.com
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