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Rupee weakens due to US-China trade war!

Tuesday - August 6, 2019 4:06 pm , Category : WTN SPECIAL
The biggest fall in rupee in a day after 6 years
The biggest fall in rupee in a day after 6 years

China's 'cleverness' affects ‘negativity’ on Indian rupee

AUG 06 (WTN) - The ongoing bitterness, controversy and competition between capitalist country America and communist country China is nothing new. For some time, the ongoing trade war between these two big economic superpowers of the world increased even more when the US made a big decision to blacklist China's currency Yuan. For your information, let you know that America has taken such a big decision once again after 1990. But the 'negative' impact of the ongoing trade war between China and the US is affecting the Indian rupee.

In a statement issued by the US in the ongoing dispute between these two countries, it has been said that China is doing ‘skullduggery’ its currency Yuan. The currency dispute between China and the US went deeper, when China 'devalued' its currency. The devaluation of China's own currency means that China has reduced the value of its currency to sell its goods 'cheaply' in the international market. According to international economics experts, this move by China has had a 'big impact' on the worldwide currency market. Talking about India, this decision of China has recorded the biggest 'fall' of 6 years in Indian rupees in one day.

Indeed, China's currency Yuan saw the biggest decline in nearly a decade. In early trading on Monday, Yuan fell below the currency of the US currency to 7 Yuan per dollar, which is the lowest level since August 2010. For your information, let you know that the Chinese currency is not like other currencies in the world. The Central Bank of China, the People's Bank of China, set the price of the national currency Yuan every day.

The Central Bank of China controls this rate through an 'official midpoint', which can cause 'volatility' in trading on any given day. China's central bank aims to make the exchange rate more market-friendly. The weakening of China's currency Yuan simply means that it will make China's exports cheaper, which will have a 'negative' effect on Indian rupee and Indian exports.

The devaluation of the currency of China is also influencing the ‘impact’ on India. For your information, let you know that in the ongoing trade war between America and China, this step has been taken by China against the American steps. If this continues, the Indian rupee may weaken further. Buying crude oil for India will be costly due to weak Indian rupee. The price of petrol and diesel will increase in India in such a situation, due to which there is a 'possibility' of rising inflation.

It is clear that if the trade war between China and the US continues, then it will affect the Indian rupee. After China's devaluation of its currency, the Indian rupee will be weaker against the US dollar. If the Indian rupee weakens, it is natural that the inflation will increase in the country. According to the information, if the rupee weakens against the dollar, then the Indian oil companies will have a burden of Rs 8,000 crore. In this case, the oil companies have to increase the prices of petrol and diesel. If the prices of petroleum products increase by about 10 per cent, it increases the inflation by about 0.8 per cent.