The Indian Vice President, Hamid Ansari's call during BRICS nations first trade fair in Goa to trade more in their currencies was timely and makes shrewd commercial sense (AV article 22 Oct p18).
In 2016 there were severe major fluctuations in exchange rates, often due to political reasons rather than just underlying economic reasons. Against the US Dollar, year to date fluctuations have been: revaluations: Brazil 23.8%; Russia 15.9% and South Africa 8.6% and devaluations U.K. 17.3%; Argentina 14.6%; Mexico 8.9% and Turkey 5.7% (FT Analysis. Currencies, 15/16 Oct, p21).
If it is known that country A regularly trades with country B on a long term basis a decision could be made to trade and settle in each other's currencies. International transaction costs as well as unpredictable losses/gains due to currency fluctuations can be avoided.
Nagindas Khajuria
By email
