New Delhi: New Delhi: BRICS (Brazil, Russia, India, China and South Africa) nations on Thursday agreed to set up a $100-billion foreign currency reserve pool to counter the impact of a pull-out by foreign investors due to US Federal Reserve's tapering of quantitative easing programme.
While China would contribute $41 billion, Brazil, India and Russia would contribute $18 billion each to the currency reserve pool. Similarly, South Africa would contribute $5 billion.
The US Federal Open Market Committee meeting, scheduled for September 17-18, is expected to indicate when the Fed might start tapering the stimulus programme.
Prime Minister Manmohan Singh hailed the announcement on the currency pool, to be called the contingent reserve arrangement (CRA). He said the development comes at a very crucial juncture when emerging market currencies were very vulnerable due to withdrawal of the easy money policy by the U.S.
In addition, on Friday there could be an announcement on the $15-million currency swap agreement signed between India and Japan in 2011 to tackle any depletion of foreign exchange reserves.
BRICS nations also decided to have a New Development Bank, with an initial subscribed capital of $50 billion. The bank would meet infrastructure needs of emerging markets.
Indian officials also praised the support of the G20 to provide reassurance over the winding down of the Fed's quantitative easing programme as the US economy picks up.
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