State-run SBI chief Arundhati Bhattacharya on Wednesday said Chinese currency Yuan devaluation is a challenge and expressed hope that India has potential to overcome this challenge.
“Yuan devaluation is a challenge obviously because it makes our exporters a little uncompetitive. As it is they have to deal with higher interest rate. Devaluation means Chinese exports becomes that much cheaper,” she said.
It also makes import cheaper which is also a challenge, she said.
“There were many challenges that we have faced earlier. I am sure that we will face this challenge and overcome,” she said.
China’s central bank on Tuesday devalued its tightly controlled currency by close to 2% to boost exports, amid a slowdown in the world’s second-largest economy and the recent stock market crash.
Even global exports are on a sliding path. This decline in global demand is putting pressure on the export-driven Chinese economy.
The world’s largest exporter, China’s exports account for 13.7% of the global pie. India’s overall exports have contracted for seven straight months until June.
Asked about pressure on banking sector due to discoms debt, Bhattacharya said “there is stress. This is something which is in the knowledge of the central government and state government.”
They need to take up a number of steps in order to ensure discoms becomes viable entities, she said, adding, “this is something that the government has to take a call.”