Finance Minister Arun Jaitley, asserting that India is on a “sound footing” as manufacturing and services sectors have begun picking up and the government was focused on strengthening the real economy rather than being swayed by the market volatility, has said that factors like the Chinese devaluation of yuan and the US Fed's likely interest rate hike are 'transient' and it will be only the real economy that will dictate the currency rate fluctuations and markets in India.
Jaitley while speaking on the sidelines of the G20 meeting of Finance Ministers and Central Bank Governors, pitched for global safety nets to address concerns over volatility in currency and stock markets, a demand that came against the backdrop of the economic shocks triggered by the Chinese devaluation of yuan. He also sought well-designed and quickly-triggered safety nets under IMF (International Monetary Fund) by strengthening of liquidity arrangements by multilateral swap arrangements between member countries to tackle negative spillovers arising from domestic action.
The FM also said that Fed hike remains a matter which the US will decide later this month. But, according to me, whatever situation emerges, that would be only a transient phase and therefore our response is that we have to strengthen our own real economy. He said that India needs to ensure that the parameters of its own real economy are strengthened and the government progresses well on that track.
Meanwhile, the G20 which includes the advanced economies such as the USA and Europe as well as the as the BRICS members, called for moving towards market-determined currency rates, in backdrop of China's surprise decision to revalue the yuan as it tried to contain the market turmoil that caused the currency to drop the most in 21 years last month.
