The other three BRICs (Brazil, Russia, India, China) have been vocal in their desire for a dollar alternative in recent months but India had been less vocal. That ended on Friday as an advisor to Prime Minister Sing said “The major part of Indian reserves are in dollars — that is something that’s a problem for us.”
French Finance Minister Lagarde and BdF Governor Noyer said that they would like to see a more “coordinated” system of global exchange rates.
The trouble with managed exchange rates is that they allow imbalances to build up without the escape valve of floating exchange rates to adjust. Exhibit one: The closely managed Chinese Yuan. Do we want to create more imbalances like that for the sake of “stability” in the short-run? I think not.
