India is liaising with other emerging-economy countries on a plan to co-ordinate intervention in offshore currency markets blamed for fuelling a currency rout over the past three months, a senior Indian finance ministry official said on Friday.
"It is now time to stop," Dipak Dasgupta, the ministry's principal economic adviser, told Reuters, referring to the speculation he said was damaging the stability of the world economy.
Dasgupta said there had been correspondence among the countries on the plans in the last few weeks and predicted action would come quickly, but he declined to share specific details of the discussions.
"It is going to happen in a matter of days rather than weeks," he said. "Brazil and India can start the move."
It was not immediately clear how many takers there were for such a proposal from other major emerging economies.
Offshore markets developed to allow foreign investors to hedge or speculate on emerging market currencies when exchange controls in those countries made it difficult to trade directly in the domestic spot market.
Dasgupta said such markets had exerted pressure on 12 of the main emerging market currencies, including Brazil, China, India, Russia, South Africa, Turkey, and Malaysia.
He said that, acting together, even four or five members would have estimated international reserves of $1.2 trillion. With China, the total reserves exceed $6 trillion, he said. "Once they decide they will move to intervene to mutually support each other to put a floor, there is no force that can stop the impact," he said.
India's rupee currency is only partly convertible, making it theoretically impossible to directly speculate in the domestic forex market. The rupee is the worst performing major currency in recent months, having lost about 20 percent against the dollar since May.
Non-deliverable forward (NDF) markets operating mainly from Singapore allow trade in several Asian currencies, including the rupee. They allow investors to bet without ever having to physically exchange the currency involved.
In July, Indian central bank Governor Duvvuri Subbarao said he would rather there were no NDF markets.