Posted on 10/29/2007 5:03:48 AM PDT by Brilliant
MUMBAI -- U.S. Treasury Secretary Henry Paulson praised India on Monday for allowing the rupee to be driven by market forces.
Answering questions after a speech, Mr. Paulson said the appreciation of the rupee "doesn't seem to be hurting [India's] economic performance any." The rupee has soared to nine-and-a-half year highs this month amid strong investment inflows. But Mr. Paulson said India's economy remains strong and growth is under control.
He contrasted India's relatively free-floating currency with the Chinese yuan, which is held in a tight band. Mr. Paulson reiterated the call by the G7 earlier this month for China to let the yuan appreciate more quickly, while acknowledging that a move to a freely floating regime isn't practical in the near term.
When asked about the outlook for the U.S. dollar, Mr. Paulson only repeated the standard position that a strong dollar is in the U.S. interest and that currency values should be determined by market forces and be based on economic fundamentals.
Mr. Paulson also warned against growing protectionism around the world, including anti-China sentiment in the U.S. Fears that growth in China and India could hurt the U.S, are wrong, he said. Their growth is "going to benefit all of the countries around the world, including the U.S.," he said.
Noting that global capital markets have become more integrated, Mr. Paulson said that the regulatory systems of different countries should also be aligned. "I think it is very important that we move toward regulatory consistency and harmony," he said.
Mr. Paulson also said he has heard positive things about the Indian government's plans to regulate some inflows into equities, but that success will depend on implementation...
(Excerpt) Read more at online.wsj.com ...
Paulson is being disingenuous. The “strong” rupee is only strong in light of the the U.S. dollar’s steady decline. In fact the Rupee has actually lost value against the Yen, and Euro while remaining steady against the Pound. It has also declined vis-a-vis the Australian and Canadian dollars.
Many Indians are complaining about the strong rupee. If the strong rupee is actually losing, then it would make for good news.
And what is stopping the yuan from behaving similarly? Ok, sorry I am probably intruding on one of your “The world is unfair.to China” rants.
Whine on...
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