Now where have I heard this theme before, `India in talks with other emerging economies to intervene in offshore currency markets`??
This objective obviously has some merit, in as much as if one is convinced that intervention is still a robust strategy, then better to have a much bigger collective purse to bring to the table. The rationale presumably being that this large stock of collective reserves will be sufficient to detract would be speculators from launching an assault on an individual currency. But as always, the devil will be in the detail. It will always be more difficult to establish this form of mutual involvement, when countries are still seen as having developing economies, with large swings in data being commonplace.
Alternatively (and more realistically perhaps) could this be the foothills at the start of a collective climb for `member` countries to link the value of their currencies to each other, with the objective of avoiding large individual swings? Such a thing was a precursor to the euro – called at the time, `the snake in the tunnel` whereby the deviation from one currency to another, linked around a central rate was limited to 2 ¼%. At the limits, there would be intervention from those at the opposite extreme to close the gap.
Another currency bloc in the offing then??? What could possibly go wrong??
