Devaluation of Chinese currency will impact Indian exports: FIEO

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SME Times News Bureau | 12 Aug, 2015
China's central bank has devalued Yuan by two percent on Tuesday. This is the biggest devaluation in the Chinese currency since 1994.

The move has strengthened the dollar value, which has negatively impacted major world currencies including the Indian rupee, reports media.

Responding to the devaluation of Chinese Renminbi, coming on the heal of 8 percent decline in China's export for July, 2015 and slowdown in economy, S C Ralhan, President, Federation of Indian Export Organisations (FIEO) said that the devaluation will affect India's exports not only to China but to other countries also with increasing competitiveness of Chinese exports.

"This may swell the trade deficit further, which is already touching USD 50 Billion, as imports from China may increase particularly as China is having excessive capacity in diverse sectors of manufacturing."

President, FIEO said that this may lead to dumping in India and we have to keep our trade defense measures ready to address the dumping, if it happens.

Ralhan said that this may lead to a currency war as can be seen by huge depreciation in numerous currencies such as Euro, Japanese Yen, Brazalian Real, Turkish Lira, etc.

The huge volatility in currencies will increase the hedging cost for Indian exports also, said FIEO.