New strategy to offset yuan drop
'There has to be a response in terms of policy, both from the government and the RBI'
By : DC Correspondent
Update: 2015-08-17 06:50 GMT
New Delhi: Finance secretary Rajiv Mehrishi has said that the government will come out with a “carefully thought-out response” to deal situation arising out of devaluation of Chinese Yuan. “Where we are competing with China, our exports are likely to be adversely affected (following yuan devaluation). If China becomes a more attractive investment destination, then there would be an outflow of money from here. There will be a reverse flow,” Mr Mehrishi told a news agency.
He said that devaluation of yuan is something which has to be taken note of. “There has to be a response in terms of policy, both from the government and the RBI. We are still working at it. There are a whole host of areas that need attention. Maybe, our export policy,” he said.
The secretary said that “a carefully thought-out response” will be made to help exports and investments, refusing to elaborate. “We have to make sure there is more investment, that the issues of the steel sector are attended to... And if you are willing to become competitive in exports, that is the idea, whatever is required (will be done),” he said.
Mr Mehrishi said that Rupee will find its own value and there is no need for any intervention at this stage and there is nothing to be alarmed about as of now. He said there was some devaluation in the rupee, but it has stabilised. “I don’t think there is panic in the currency market at all. Economy is doing well, IIP is doing well, we are well placed to handle this,” he said, adding that the finance ministry is comfortable with whatever rate the market determines. He said that if you let your currency float, it is an issue of demand and supply ultimately.
“Market is the best judge. We don’t control exchange rate any more, it is market determined. So, Rupee finds its own value in the markets. There is no extraordinary development in the Rupee in the last couple of days,” he said.