Saint-Petersburg, 06/09/2013 (Agence Europe) - Given their concern about the volatility of the exchange markets, the so-called BRICS countries (Brazil, Russia, India, China and South Africa) made a decision on Thursday 5 December to set up a $100 billion fund to shore up the currencies of some of their members.
Chinese Deputy Minister for Finance Zhu Guangyao, declared that “the reserve amount available will be $100 billion and China will assume the lion's share of it”. According to a press release from the BRICS on Thursday 5 September at the end of their summit, which took place on the sidelines of the G20, the contributions made will be divided between the countries as follows: China will provide $41 billion; Brazil, India and Russia $18 billion each and South Africa $5 billion.
The BRICS also underlined the “progress” made in setting up a development bank and whose initial capital will be $50 billion.
The four countries pointed to the sluggishness of the economic recovery and the high level of unemployment and reiterated their “concern” about the undesirable effects of contagion resulting from the monetary decisions of developed countries. This was a direct allusion to the decision by the US FED to end quantitive easing, due to the sustained recovery in the US. The BRICS are calling on the US to carefully define well-calibrated policies and to communicate them accurately.
On Thursday evening at the end of the first day of the G20 summit, the Russian finance minister, Anton Siluanov, stated that “the time of easy money is gradually coming to an end. The question is: how fast?” According to Siluanov, the announced reduction in massive purchases of US bonds by the FED constitutes a “good approach”, even if “the majority of emerging economies” at the G20 summit want to “avoid excessive volatility that leads to sharp falls in the value of their currencies”.
US monetary policy, combined with economic slowdown in emerging countries, economic recovery in developed countries and geopolitical uncertainty caused by the situation in Syria, has provoked a flight of capital from developing countries and, in turn, a fall in their respective currencies. On Friday, US employment figures came in for close scrutiny because they are likely to provide an indication of the pace at which the FED will amend its accommodative monetary policy. (MB/transl.fl)