After financial crisis, a currency crisis likely

Source: PTI Mar 26 2010 , Mumbai

Even as the global economic meltdown is beginning to fade, the world might be in for another crisis -- a currency crisis, an expert has warned.

"The next biggest problem may be a currency crisis. It is a possibility that the next crisis awaiting the world is a currency crisis," renowned currency expert and Non-Executive Director of Elara Capital, Avinash Persaud, told PTI here.

Persaud is the Chairman of Intelligence Capital, a firm that advises governments of many G-20 countries on managing their finances and an expert member of the UK government's Treasury Group.

"The measures that were taken to bail-out countries from the financial crisis led to a fiscal crisis and a currency crisis can possibly erupt after this fiscal crisis," he said.

The fiscal crisis brought about an increased burden on monetary policy and different countries met it in different ways, he said.

"The US and the UK have no other option other than having weak currencies. In fact, the US has a dollar de-valuation policy," he said.

What India's banking regulator Reserve Bank has done in its exchange (rate) policy is sensible, by using a basket of currencies, he said.

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