Currency crisis likely to cripple global markets: Expert

MUMBAI: Even as the global economic meltdown is beginning to fade, the world might be in for
another crisis — a currency crisis, an expert has warned.
“The next biggest problem may be a currency crisis. It is a possibility that the next crisis awaiting
the world is a currency crisis,” renowned currency expert and Non-Executive Director of Elara
Capital, Mr Avinash Persaud, told PTI here.
He is the Chairman of Intelligence Capital, a company that advises the governments of many G-20
countries on managing their finances, and an expert member of the UK Government’s Treasury
Group.
The fiscal crisis brought about an increased burden on monetary policy and different countries met
it in different ways, he said.
“The US and the UK have no other option other than having weak currencies. In fact, the US has
a dollar de-valuation policy,” he said.
“India actually manages its currency (rupee) against the dollar. Now the country is using a basket
of currencies. In fact, we would want to limit the dollar problems. We don’t want to import dollar
problems — the RBI is trying to avoid that. It’s sensibl e,” he said.
According to Mr Persaud, the only source of growth is to have a weak currency.
While commenting on the European fiscal crisis which almost overwhelmed Greece, he said that
the consequence of a collapse would have been very grave.
“The Greek problem has now spread to Spain and Portugal. The European Union is now engaged
in trying to save these two countries. The European political directorate is fully conscious about
the consequences. They are trying to limit the problem. But whil e containing this problem a
currency crisis might erupt,” he warned.
However, the present crisis in Europe may turn out to be a blessing in disguise for the emerging
economies. “The fiscal problems in the US, the UK and Greece means there will be a lot of
liquidity in the system. This liquidity will lift countries with re al assets. It will be good for the
emerging economies like India,” Mr Persaud said.