The five BRICS nations – Brazil, Russia, India, China and South Africa – have agreed to set up a US$100 billion reserve fund to steady currency markets destabilised by an expected pullback of US monetary stimulus.
The move comes as emerging economies across the world have been hit by speculation that US may scale back its key economic stimulus programme soon. That has seen investors pull out money, hurting currencies of emerging nations.
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China has agreed to contribute US$41 billion to the BRICS currency reserve pool, South Africa US$5 billion, and Russia, Brazil and India US$18 billion each.
"The initiative to establish a BRICS currency reserve pool is at its final stage. Its capital volume has been agreed at US$100 billion," Russian President Vladimir Putin said during the G20 summit in St Petersburg.
The BRICS fund was proposed at a meeting of the group in Durban earlier this year. The BRICS had earlier proposed the establishment of a development bank with a subscribed capital of US$50 billion from the member countries.
"In the list of the progress achieved in the negotiations of the NDB and the CRA, the Brics leaders expect tangible results by the time of the next Summit," the statement said.
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By GlobalDataBRICS leaders have also expressed their concern with the stalling of the International Monetary Fund reform process.
"In light of the increase in financial market and capital flow volatility during recent months, the BRICS leaders reiterated their concerns they had expressed in the Durban Summit in March, regarding the unintended negative spillovers of unconventional monetary policies of certain developed economies," the statement said.
"They emphasised that the eventual normalisation of monetary policies needs to be effectively and carefully calibrated and clearly communicated," it added.
Against the US dollar, the Indian rupee has weakened 24%, South Africa’s rand nearly 17%, Brazilian’s real 15% and Russia’s rouble 8% since May.
