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Journalism of Courage
The rupee fell sharply by approximately 0.6 per cent and was trading at 64.15 against the dollar by Tuesday afternoon after China decided to devalue Yuan by 2 per cent against the dollar earlier in the day in a bid to support its falling exports that had declined by 8.3 per cent in July.
A depreciation of the Yuan against the dollar is expected to hurt India’s exports and reduce India’s export competitiveness. Experts say that China’s move signals more instability in the near future as it may take more such measures.
“China has in a way admitted to the problems its economy faces. The bigger concern now is that China may take more such measures and may further devalue its currency. That will impact the Indian rupee going forward,” said Jamal Mecklai of Mecklai Financial.
While the benchmark Sensex at the Bombay Stock Exchange was trading around 200 points lower at below 28,000 mark, several India companies that are impacted by Chinese exports are under pressure too. The biggest losers are Indian tyre manufacturers who have already been hit by the rising demand for cheaper Chinese tyres in Indian markets.
Shares of tyre companies took a hit of up to 8 per cent on Tuesday following the news. In the afternoon trading hours Apollo Tyres was down by around 8 per cent while JK Tyres was trading at 5.4 per cent lower than its closing price on Monday. Shares of MRF and Ceat Tyres were also down by 4.9 and 4.7 per cent, respectively.
