Brazil, Russia, India, China and South Africa, the so-called BRICS group of countries, have agreed to to pool together a USD100 billion or GBP65 billion fund as a buffer for financial shocks and downturns.
This decision comes after many emerging markets throughout the globe have been saddled by speculative activities based on the rumored cutbacks of the United States on its economic stimulus programme.
The leaders of the BRICS countries all said the mechanics of the fund is still being threshed out. According to Russian President Vladimir Putin during the last G20 summit held in St, Petersburg, "The initiative to establish a BRICS currency reserve pool is at its final state. Its capital volume has been agreed at USD100 billion,"
The recent statements of Fed Reserve Chairman Ben Bernanke together with the recovering US economy have seen many investors withdraw their investments from these economies. Many investors have been hedging on US dollars, speculating that this would yield higher returns should the cutbacks occur. This then resulted in the increasing volatile performance of stock markets as well as currency markets. The main concern would be the effect of these speculative actions on the overall growth of these economies.
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