Such a currency war can be avoided through dialogue and not through competitive devaluations, Mukherjee stressed at a crowded press conference of finance ministers of BRICS nations Brazil, Russia, India, China and South Africa at the headquarters of the International Monetary Fund here.

"Yes, if the crisis deepens further and there is greater volatility in financial flows, there is an increased risk of this (currency war) happening," Mukherjee said in response to a question.

"But our view is that if such tensions arise, it should be eased through the dialogue and not through competitive devaluations," he said.

Mukherjee pointed out the currencies used in BRICS countries should be widely appreciated and should be taken into account while determining the ingredients of special drawing rights (SDR) maintained by the IMF, as these nations' contributions to global output and the economy is increasingly substantially.

"But we are not suggesting right now, because there are many other factors which ought to be taken into account, including free convertibility and other things which are not uniform, but the importance of these currencies has increased," Mukherjee said in response to a question.