It is too early to say that Japan’s aggressive recent moves to weaken the yen constitute a currency war but countries must resist falling into the trap of competitive devaluations, finance minister P Chidambaram said in an interview to Reuters Television.

“It’s still early to call this a currency war, only Japan has depreciated its currency, what choice does Japan have? They have to get growth up, they cannot continue with zero growth any longer,” said Chidambaram.

But he said he was worried about the potential impact of further competitive devaluations on India. Chidambaram is on a four-country roadshow to drum up foreign investment.

The RBI cut interest rates earlier on Tuesday for the first time in nine months but struck a cautious note on further easing as it waits to see how the government’s upcoming budget aims to trim a bloated fiscal deficit

Chidambaram agreed fiscal consolidation was essential. “I welcome the decision (RBI governor) has taken today, going forward, if inflation moderates, I think he will do more..... More has to be done on the fiscal side (to) contain inflation and revive growth. To revive growth, the ball is in the government’s court.”