G20 acknowledges India’s concerns on tapering stimulus
St Petersburg, Sep 7: India scored two important victories at the G20 meeting —one as part of the official proceedings and the other on the sidelines—aimed at shoring up market sentiment.
Along with other affected countries, India succeeded in getting the G20 leaders' declaration to acknowledge the need for cooperation to manage the spill over effects of a shift in accommodative monetary policies that developed countries have pursued in recent years.
The declaration also said that future changes to monetary policy settings will be "carefully calibrated and clearly communicated".
Separately, and on the sidelines on the summit, progress was made on two currency reserve agreements that will help signal to the markets India's enhanced ability to deal with extreme currency volatility.
Apart from the $100 billion Contingent Reserve Arrangement the BRICS announced on Thursday, India on Friday expanded a similar existing mechanism with Japan from $15 billion to $50 billion.
Planning Commission deputy chairman Montek Singh Ahluwalia and economic affairs secretary Arvind Mayaram told reporters separately that India doesn't expect to use either pool but this will signal to markets that it has more instruments to deal with any emergency.
'With $280 billion in reserves, I don't think we will be drawing on these reserves. But yes, it has a soothing effect on markets," Ahluwalia said.
Both the BRICS fund and India's currency swap arrangement with Japan are pools that participants can draw from in emergencies such as a balance of payments crisis. The central bank has a legal obligation to honour a commitment to the extent of India's participation in the fund—$18 billion in the case of the BRICS fund-—should any participant decide to trigger the mechanism.
Lastupdate on : Sat, 7 Sep 2013 21:30:00 Makkah time
Lastupdate on : Sat, 7 Sep 2013 18:30:00 GMT
Lastupdate on : Sun, 8 Sep 2013 00:00:00 IST
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