China’s tax breaks can lead to India’s trouble

Tax

The loss of 110 paise in a day in Indian rupees has given a clear indication that India may have to bear the brunt of the protective policies of other countries. In the opinion of the experts, behind this decline of rupees, there are mainly rates charged by the United States on import from Turkey. This decision of US President Donald Trump has plummeted the currency lira of Turkey, which has also affected the currency of all the worlds on the Indian rupee.

The finance ministry and the Reserve Bank are also cautious about the impact of the kind of economic crisis that Turkey is facing. Experts believe that the Reserve Bank of India will not want to aggressively intervene in the way the global environment is created. Because the price of Indian rupee will mean the effect on Indian exports.

Tax

According to sources in the RBI, the problem is not that the economic crisis on Turkey is deep, but like other international banks, we are worried that such a crisis does not arise with the currency of China. Significantly, the defect of Turkish currency is being blamed on new charges imposed by the United States. The US is also charging similar charges on China’s products. In response, China has also imposed new charges to discourage US imports. In such a case, it is being speculated that the crisis caused by the Turkish currency lira can spread in China’s currency yuan. This will be a matter of more crisis for India. This is because India’s bilateral trade with Turkey is only $ 6.5 billion, while China and India’s bilateral business is about $ 70 billion. Trade balance in Turkey is in favor of India while trade balance with China is very much against India.

Aditi Nayar, chief economist of Ikra Ltd, believes that the Indian rupee will cross 70 levels for a while, but in the end it will be around 69. According to him, the price of crude oil in the coming days and the performance of the world’s second currencies against the dollar will also determine the price of the Indian rupee.

He expressed hope that the Reserve Bank of India will now be more proactive about the foreign currency market. The position of foreign exchange reserves in India is good, which is an auspicious sign. But the RBI will not be more active when the currency of other developing countries also declines, as indicated. To protect its exports against these countries, much of the interference can not be made against the price of Indian Rupees.

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