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US expects Chinese currency revaluation in a month – will India follow suit with Manmohan Singh’s visit?
US is looking into the manufacturing and service outsourcing unfair trade practice by China and India due to artificial lower value of their currencies. While Indian currency floats in open market, it is tightly controlled (far more tightly than even the Japanese) by Indian central Bank – Reserve Bank of India to make way for Indian oligarchs – the business community.
The Bush administration has told key senators that it expects China to revalue its currency in August ahead of a planned visit to Washington by President Hu Jintao in September, according to people familiar with the matter.
Senators Charles Schumer and Lindsey Graham, co-sponsors of a bill that would impose a 27.5 per cent tariff on Chinese imports, agreed to delay a vote on their bill after receiving what they regarded as an assurance that China will move on its currency next month.
Now the biggest question is will India also follow suit? Indian Prime Minister’s visit to America may be the start of the formal Indian currency revaluation to a stronger Rupee. The imbalance is heavy. The Indian Rupee is artificially devalued by at least 45% and that is what driving jobs away from America and Europe in the form of cheap outsourcing contracts. Bush Administration is concerned about the trade imbalance with India. American business community especially the retailers like WalMart and others are asking Bush Administration to make Manmohan Singh open the flood gate for American retailers in India. India oligarchs – the top business families are resisting the same.
But India may have to revalue its currency to much higher level. And then only the true value and worth of Indian outsourcing industry will be proved.
OUTSOURCING ARTICLES
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