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India needs more flexible exchange rate policy: Rogoff

Our Bureau

Mumbai , July 18

WHILE India has been following a healthy exchange rate policy, not allowing wide fluctuations in the value of its currency, there is a case for countries like India and China to work for a more flexible policy, according to Mr Kenneth S. Rogoff, Chief Economist at the International Monetary Fund (IMF).

Given a more flexible exchange rate policy, all Asian currencies including the rupee will benefit, he added.

Speaking to newspersons on Friday, Mr Rogoff said that nearly all the major crises in the last 10 years have been witnessed in countries with fixed exchange rates.

A rigid exchange rate policy with growing foreign currency reserves would cause upward inflationary pressure in the economy, he warned.

To on a question on IMF policy regarding countries under its assistance, Mr Rogoff said, "India has made very good use of the IMF programme in 1991." The subsequent economic reforms have helped the country achieve good growth, he added.

Referring to the IMF Chief Economist designate, Mr Raghuram Rajan, who will take over in September, Mr Rogoff said: ``He is an expert in banking and finance and these two sectors are going to become very important in the future.

"Apart from this, he will also bring the perspective of developing nations with him.''

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