India vs China: China’s disaster relief for India! Inflation is going to happen due to dragon, know how – India to get benefitted from as Chinese imports cheaper as rupee gains over yuan
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Imports from China are increasing continuously in this financial year also. During January to April, it increased by 4.6 percent to reach $ 37.86 billion. China is India’s largest trading partner after the US. Jahangir Aziz, Head of Emerging Market Economics at JP Morgan said that China is our biggest source of non-energy imports. A stronger rupee against the yuan will make it cheaper for us to import from there. This will reduce inflation in India as goods imported from China will be cheaper. Anubhuti Sahai, head of South Asia economic research at Standard Chartered Bank, said the yuan’s weakness means China is exporting goods cheaply to the rest of the world. This will greatly benefit India because China is our important partner, especially in the field of chemicals etc.
decline of yuan
Experts say that inflation in the country will largely depend on the monsoon situation. If the monsoon is not affected much due to El Nino, then the weakness of Yuan will be icing on the cake for India. Sahay said that monsoon is the most important thing for India in the next few quarters. Core inflation is under control in the country and a sharp rise in commodity prices is not expected in the immediate term. In such a situation, the strengthening of the rupee against the yuan is good news for India. There are many reasons for the yuan’s weakness. China’s economy is struggling after the Corona epidemic while returns have increased in the US after interest rates increased. China’s exports have fallen due to the slowdown in the global economy.
Last month, the yuan hit a six-month low against the dollar. Rahul Bajoria, senior regional economist at Barclays, said the yuan’s weakness could be a boon for India. This can help us in reducing inflation. The steps taken by the RBI to contain the volatility in the rupee have also helped the rupee a lot. If the yuan continues to depreciate against the dollar, it will strengthen the rupee. The rupee has depreciated by 0.8 per cent against the dollar this year as compared to 10 per cent fall in the previous year. Experts say that there has been a huge foreign investment in equity in recent months. In such a situation, the RBI is busy filling its coffers by buying dollars and has stopped the flight of the rupee.
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