New Delhi: Any depreciation in the rupee on account of China-led turmoil in the global financial markets should be a welcome sign for India, or else Indian exports will suffer more at the hands of China and other emerging countries witnessing correction in their currencies, said Assocham on Sunday.
“India should allow its currency to slide while RBI should use ample foreign exchange reserves to defend the currency only if there is a rout situation. However, there is a distinct possibility that the rupee could actually strengthen over the medium term,” said Assocham.
It also said that India must also ensure that Indian exports get back their competitiveness even in the midst of global slowdown. The major challenge is coming from China in various forms with sizeable influence on the currency valuation.
Yuan devaluation will negatively impact Indian firms which have export exposure to China in sectors such as tyres, pharmaceuticals, steel and organic chemicals textiles due to changing in terms of trade, it said.
