The headlines are screaming that China has devalued its currency. But let us go into details. China has devalued its curency by 0.2%. When we look at long term picture below, Indian rupee has lost nearly 50% value against Chinese currency in last 7 years.
When we look at the long term picture, China's currency has strenthened against most currencies. Currently, China is facting a stock market crash and housing bubble burst. Devaluing its currency, it a way to lessen the pain for the people. China is afraid of a revolution should so many of its citizens suffer. It is likely that China will continue to devalue its currency in coming months.
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