Reserve Bank governor Shaktikanta Das on Friday said ensuring orderly exchange rates is the responsibility of the IMF and not individual countries like the US and that currency manipulation charges by one nation against another reeks of bilateral hegemony.
It can be noted that US president Donald Trump has been singling out India and China as currency manipulators. Trump went to the extent of specifically mentioning Reserve Bank buying dollars from the markets as a proxy of setting the exchange rates.
Concerned over the issues around currency management, Das, without naming any country in particular, called for "collectively ensuring multilateral principles and frameworks for orderly exchange rates and payment arrangements are not superseded by bilateral hegemony."
Questioning how can some countries call others "currency manipulators," he said such labelling should not be a bilateral prerogative as there are multi-lateral institutions like the International Monetary Fund exist to do such policing.
"The best way forward", Das said is to strengthen existing institutions like the IMF and make them more "relevant and trusted".
Das' statement comes in the wake of the US treasury department's recent currency report to the Congress. While the latest report does not accuse India of currency manipulation, earlier reports had raised red flags over the RBI's dollar purchase. In fact, the latest bi-annual report paints all emerging markets as currency manipulators.
Amidst growing concerns about falling growth in the world economy, Das, while launching a book focused on the IMF, in the Capital on Friday called for closer coordination between monetary and fiscal policies across the world to cushion the impact of the slowdown.
Pointing out that global cooperation in finance has become "weaker" in recent years, Das specifically flagged the decade-old policy of low interest rate regimes in major economies as a challenge for emerging markets like India.
"It is important, in the backdrop of slowing global growth, that policies of monetary and fiscal authorities are well-calibrated so that they support growth without further build-up of leverage and asset price bubbles. Prudent policies are critical to growth with macroeconomic stability," he said.
Globally, monetary and fiscal policies need to focus on judiciously using policy space and undertake structural reforms to improve productivity, innovation and job creation, he said.
On the issue of low interest rates in many advanced economies, he said such countries are pursuing their policies without "recognizing their adverse impacts".
Das said a third of the total bonds issued by advanced economies worth $13 trillion getting yielding negative returns now.
Amid low global interest rates, total credit to the non-financial sector in emerging markets went up from 107.2 percent of GDP at the end of 2008 to 194.4 percent of GDP by March 2018, and dropped to 183.2 percent at the end of 2018, the governor said.
In the face of such difficulties, the emerging markets will be focusing on macroeconomic and financial stability, while focusing on growth.
The world will be looking at bodies like the IMF for dependable solutions, he said, but expressed doubts on how these challenge will be negotiated.
"Global order today faces several challenges that will test the skills of the international organisations as well as those of national monetary and fiscal authorities," he said.
He further said there is an urgency to the completion of the 15th general review of quotas, which has been delayed for four years now.