India is likely to press for intensive engagement to amicably resolve the currency war, mainly between the US dollar and Chinese yuan, at the two-day meeting of G-20 finance ministers and central bank governors beginning here tomorrow.
Finance Minister Pranab Mukherjee, who is heading the Indian delegation to the ministerial meeting, will also hold separate consultations with the finance ministers of other BRIC nations, namely Brazil, Russia and China, on wide-ranging global economic issues, sources said.
Mukherjee had earlier said, "My approach is that we should try to engage the countries into negotiations and build up a consensus through which the matter (concerning currency war) could be resolved."
He had also stressed that such issues "cannot be resolved through confrontation... And we should engage in the process of building up consensus."
While the US wants China to allow the yuan to appreciate in line with market forces, the Chinese government is resisting the move, as it would hurt the country's exports. The currency war has prompted some other countries, especially Japan, to weaken their currencies by pumping more funds into the market.
India, which has witnessed about 5.5 per cent appreciation of the rupee against the dollar since January, has not taken a stand on the issue and wants the matter to be sorted out without confrontation in the interest of global financial stability.
Meanwhile, a US official said in Washington that when large economies with undervalued exchange rates act to keep their currencies from appreciating, it compels other countries to do the same, setting off dynamic of competitive non-appreciaton.
"It's bad for the system and it's bad for all of us. It imposes an unfair burden of adjustment on other emerging markets that are running more flexible exchange rate regimes," he added.
In addition to currency war, the G-20, which is a club of developed and emerging economies, will also deliberate on issues like quota reforms in the International Monetary Fund, protectionism, the global economic situation and a framework for strong, sustainable and balanced growth.
The ministerial meeting will be followed by G-20 summit to be held on November 11-12 at Seoul, which is likely to be attended by global leaders including Indian Prime Minister Manmohan Singh, among others.
US President Barack Obama, who will visit India in early November, is also expected to attend the G-20 Summit, which is being held in an Asian country for the first time.
As far as the currency crisis is concerned, World Bank President Robert Zoellick, at the recently concluded Fund-Bank meeting in Washington, had cautioned that such tensions could lead to trouble if not properly managed.
"Today, we face currency tensions. Tensions can lead to trouble if not properly managed," he had opined.
"One should take this situation for granted, because my primary message is that we are still in a very fragile recovery and people have to be careful about some of the downside risks," the World Bank chief had said.