Don’t bother, IMF official says currency intervention offers limited benefits
Landon Capital News
Foreign-exchange intervention provides limited benefits beyond the short term and currencies should be permitted to adjust to global shocks, a senior International Monetary Fund official said on Wednesday.
Krishna Srinivasan, director of the IMF’s Asia and Pacific Department, told a press conference in Mumbai that nations allowing exchange rates to move have gained more advantages.
He said exchange rates should absorb pressure and serve as the first line of defense when economies face repeated global shocks.
Central banks throughout Asia are dealing with currency weakness as global shocks trigger capital outflows and increase demand for dollars.
Policymakers from Indonesia to Japan have used a combination of interest-rate increases and market intervention.
In India, the Reserve Bank of India is conducting its strongest defense of the rupee since the 2013 taper tantrum.
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