Strong Yuan good for India's trade with China: FICCI survey
The appreciation of Chinese currency against the dollar could help India partially bridge its $ 20 billion trade gap with the neighbouring country, a survey by industry body FICCI said.business Updated: Aug 08, 2010 11:30 IST
The appreciation of Chinese currency against the dollar could help India partially bridge its $ 20 billion trade gap with the neighbouring country, a survey by industry body FICCI said.
Indian manufacturing units in the heavy engineering and power segments would also become more competitive vis-à-vis imports from China if Renminbi were to appreciate as expected, the FICCI survey of "leading" economists said.
"In case of India, the Renminbi appreciation will be of particular significance as it could help correct, at least partially, the growing trade deficit with China," it said.
It, however said the benefit would accrue over a longer period of time to developing economies, including India, as they will be able to garner a proportionately higher share of the gains resulting from global recovery in trade.
Participating economists were of the view that over the next 12 months the Yuan might move up (appreciate) by about 5 per cent.
On June 19, 2010, China announced to end Yuan's dollar peg but its currency has been sitting tight moving up by just 0.9 per cent against the US dollar.
FICCI also said that an appreciating Yuan would also give a boost to Indian investments in China and possibly open up new markets for service sector exports.
On Renminbi becoming a global reserve currency, FICCI said China will have to take steps like establishing direct currency exchange mechanism and settle trade in Yuan with different countries, especially its close trade allies.