Centre taking all steps to prevent Chinese dumping amid yuan devaluation: Nirmala

“The markets’ response to Chinese surprise devaluation of its currency against the US dollar is ample evidence that investors worry about further measures across Asian countries in order to prop up export competitiveness”, said Anand James, the co-head of the technical research desk at Geojit BNP Paribas. On top of that, currency weakness cuts both ways for Chinese manufacturers.

Rupee has fallen to a 2-year low of sub-65 to US dollar in response to the steep depreciation in the yuan, but Mehrishi indicated that there was no cause for panic.

The decision has also given rise to suspicions that the economic slowdown in China is worse than admitted by the country or seen by the outside world.

“Indian products will now face problem in global markets”.

Early this week, the Chinese government allowed yuan to decline in value by about 4 per cent against the US dollar.

“India’s key items of exports are petroleum products, gems and jewellery, chemicals and textiles”, he said. Market is the best judge.

She said the government would take steps to stop dumping of goods by China. “If they continue to devalue their currency, that’s going to be a red flag for any U.S. exporter”. Exports fell by about 8 per cent in July.

At a time when India’s exports continue to remain a concern, China also devalued its currency by almost 6% in three tranches last week, to make its own products more competitive in the global market.

For example, currency fluctuations affect the availability of cash for buying raw materials and the value of investments in foreign subsidiaries, the company said. We’re anxious about China. Although the People’s Bank of China has stated that this is a one-off move, however, history shows that currency devaluations are followed by a series of such moves. This year, the company has opened dozens of stores in China.

“I think calling [commodities] “under pressure” is a little bit of an understatement. There is no extraordinary development in the Rupee in the last couple of days”, he said. “There’s no question, that’s a shock”. With demand weak at home because of the slowing economy, Chinese steel makers are keen on increasing exports. Further sharp devaluation of the rupee, say, beyond US$ = Rs. Sellers of scrap metal, for instance, would have no trouble finding buyers in other countries. Sales to China accounted for less than 6 percent of Grace’s revenue a year ago, he said.

The PBOC also said that it will monitor “abnormal” cross border flows.

Last week’s devaluation “is small movement in the big scheme of things”, said Alessandro Rebucci, an assistant professor at the Johns Hopkins Carey Business School with an worldwide finance expertise.

One view is that China “simply wants a larger role in market forces determining its exchange rate on a daily basis”, as part of its bid to be accepted as a reserve currency in the global Monetary Fund’s special drawing rights group, Rebucci said.

“Our government, on the other hand, regrettably has been unable to appreciate the depth of the decline in our exports and take remedial steps”, Dalmia said.

But Rebucci sees continued government intervention as unlikely. “So you’re not exposed to the risks of your domestic currency”. In the long term, this is a fiscal policy effect that U.S. policymakers would look on favorably.