Whenthe international institutions like World Bank and IMF declared that the futurebelongs to the East, quickly everyone identified China and India to be thefuture growth centres, which would not only achieve and maintain a high growthprojectory, for the benefit of their economies, but also help the world tradegrowth up and kicking. It was assumed that with the developed economiesachieving only limited growth range between less than one per cent to a high ofthree per cent, China and India would continue to achieve high growth levels;thereby giving a push towards a higher world economic growth.
Asis the accepted norm, the international investors queue up for investment inthe countries, credited with higher growth rates. Their currencies tend to appreciatebecause of heavier inflow of foreign funds than outflows. This was more true ofIndia, whose forex chest swelled and rupee attained an appreciation that wasfrightening to the exporters, who cried for Government help for stabilizing theIndian rupee. Currencies like the Brazilian real and Indian rupee havedepreciated by between 15 and 25 percent in less than a quarter, the IMF noted.The exporters bemoaned that their products are being edged out on the pricingfront, as other competing economies were not inflicting with high appreciationof their currencies.
Comments