Chennai: According to the Finance Ministry of India, the devaluation of the Chinese currency will only have a temporary effect on the Indian rupee as India currently has adequate foreign exchange reserves.
China’s move to devaluate the Yuan, has spooked the Indian markets. Although the Indian rupee has recovered 14 paisa to 64.64 against the US Dollar on Wednesday by fresh selling of American currency by foreign exchange exporters and banks, concerns still loom over the domestic currency.
“What is happening in China has introduced some amount of volatility. Since our economic situation is better, this should be seen as a temporary adjustment because our currency is strong,” Thomas Cook’s Adyar Branch’s Manager, Flexi Madonna said, adding “we have adequate forex reserves”.
Mrs. Madonna also quipped in by saying that the devaluation will not affect the big foreign exchange offices in the country like Thomas Cook, but it will surely have an impact of Full Fledged Money Lenders as they won’t be able to hold on to the US Dollar for a very long time, and usually all trades happen in the US Dollar.
According to Nagarajan Ramaswamy of Avanthi Exchange, “India had foreign exchange reserves of USD 353.347 billion the previous week, marginally down than the last month.
Mr. Ramaswamy also pointed out the doing foreign exchange transfers is like buying gold, people look forward to buying gold when the prices are less, and sell when the prices rise. The same thing happens with forex.
What is important to be seen now is how the Chinese and the US Markets will behave in the due course and whether it will have any more major impact on the Indian market and the forex scene in the country.