The fact that World Bank President Robert Zoellick has said that China’s yuan may become the global reserve currency over the next 15 years assumes significance not just for the world but also for India. It has the potential to make Indian goods relatively more competitive as the Chinese currency today is highly controlled.
This is not the first time Zoellick has spoken of such a possibility and the buzz about China trying to position the yuan as a reserve currency of the future has been on for some time now. This is not a situation that will occur in the short or medium term, but surely a prospect over the time frame that Zoellick is talking about. With bilateral trade between the two Asian giants estimated at around $41 billion in 2008-09, China has now become India’s largest trading partner. The trade, however, continues to be lopsided. Exports from India are valued at about $9.7 billion while imports are as high as $31.33 billion.
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