 "China's depreciating currency could impact exports: Mehrishi")
On a day the rupee fell the most in two months on the back of China depreciating its currency, Finance Secretary Rajiv Mehrishi said the move could impact exports and foreign investment flowing into India.
"China seems to be moving towards flexible exchange rate. In my opinion, it should have some impact on our exports. Exports from China would be cheaper. It may also impact foreign direct investment if China becomes more attractive destination vis-a-vis India," Mehrishi told reporters in the finance ministry on Tuesday. "To quantify the impact of depreciation is difficult. Indian rupee is stronger today versus most currencies. Investors would go there where the exchange rate will provide them better bang for buck. So we will have to see the impact."
Separately, another senior finance ministry official said off the record, the Reserve Bank of India (RBI) not lowering interest rates and not letting the rupee depreciate will prove detrimental in global situations similar to ones caused by the People's Bank of China's actions.
In the run-up to the August 4 bi-monthly monetary policy, the government had vociferously made a case for further lowering of interest rates. But RBI Governor Raghuram Rajan maintained status quo because of inflationary concerns.
"High interest rate is hurting us," the official said, requesting not to be named. "Rupee appreciation against major currencies is not good for India."
"China seems to be moving towards flexible exchange rate. In my opinion, it should have some impact on our exports. Exports from China would be cheaper. It may also impact foreign direct investment if China becomes more attractive destination vis-a-vis India," Mehrishi told reporters in the finance ministry on Tuesday. "To quantify the impact of depreciation is difficult. Indian rupee is stronger today versus most currencies. Investors would go there where the exchange rate will provide them better bang for buck. So we will have to see the impact."
Separately, another senior finance ministry official said off the record, the Reserve Bank of India (RBI) not lowering interest rates and not letting the rupee depreciate will prove detrimental in global situations similar to ones caused by the People's Bank of China's actions.
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"My view is that we are wrong in not lowering the interest rate and we are wrong in not letting the rupee to depreciate. China is devaluating the yuan to boost their currencies," said the official.
In the run-up to the August 4 bi-monthly monetary policy, the government had vociferously made a case for further lowering of interest rates. But RBI Governor Raghuram Rajan maintained status quo because of inflationary concerns.
"High interest rate is hurting us," the official said, requesting not to be named. "Rupee appreciation against major currencies is not good for India."