The turmoil in currency markets will be an important part of the G-20 summit in St Petersburg, Russia, being hosted by President Vladmir Putin next week.
Speaking to the mediapersons in New Delhi, ahead of the summit, Planning Commission deputy chairman Montek Singh Ahluwalia, who is the key interlocutor for the Prime Minister, said, “The summit is not expected to put its seal of approval on the specifics (of how to ease the pressures on currency markets), but we expect some broad discussions.”
“Other issues on the table include path to global recovery, inclusive growth, employment generation, quotas at multilateral financial institutions for emerging economies, trade and protectionism, “ Montek said, adding, “trade and energy security will also be among the topics of focus.”
Prime Minister Manmohan Singh leaves for a three-day visit to St. Petersburg on Wednesday to join other leaders at the G-20 Summit and find ways to tackle the challenges. The visit is also expected to provide an opportunity for the Prime Minister to meet with leaders from Brazil, Russia, China and South Africa, which collectively form the BRICS nations, to take forward what is called the Durban Process, he said.
These five emerging economies had agreed in Durban in March 2013 to create a $100-billion currency reserve fund to help similar countries and poor states ease their short-term liquidity pressures and keep their financial stability.
All these countries, barring China, have seen their currencies take a hit in recent months, with the Indian rupee losing 20% against the US dollar this fiscal due to a pull-out by foreign funds after the US Federal Reserve hinted that it may ease fiscal stimulus soon.
The leaders may also take up the issue of quantitative easing (gradual withdrawal of fiscal stimulus instituted in 2008) with US President Barack Obama.