The BRIC countries are united in opposing US efforts to weaken or eliminate mechanisms to control currency fluctuations, Russia’s Finance Ministry said.
Brazil, Russia, India and China will put up “strong resistance” to attempts to make a “harsh appraisal” of currency controls at the annual meeting of the International Monetary Fund and World Bank this week in Washington, Deputy Finance Minister Dmitry Pankin told reporters late on Thursday.
The BRIC countries “have agreed on a position that exchange rates aren’t themselves a problem,” Pankin said. “Rather they are a consequence of deeper processes, such as tendencies to save, to invest, of the investment climate.”
US Treasury Secretary Timothy F Geithner said this week that large economies undervaluing their currencies may accelerate inflation, create asset bubbles and restrict growth. China is the biggest target for criticism after limiting the yuan’s rise to about 2 per cent against the dollar since a June pledge to make the currency more flexible.
The yuan was little changed today at 6.6712 per dollar at 1:29 pm Moscow time.
‘Currency war’
Japan last month sold the yen for the first time in six years to spur exports and economic growth, joining countries across Asia and Latin America that have tempered gains in their currencies against the dollar. Brazil’s Finance Minister Guido Mantega warned September 27 of a “currency war” and said that his government will buy all “excess dollars” in the market to curb the real’s appreciation. Brazil is among the countries struggling with its currency’s appreciation, as investors pump record levels of cash into emerging markets.