Wednesday, June 3, 2009

Rupee gains on Yuan

The CHART OF THE DAY shows the trade balances of the
world’s two most-populous nations and the exchange rate of their
currencies. The rupee climbed 6.2 percent against the yuan in
May, the biggest monthly gain in at least a decade, as India’s
trade deficit narrowed by 49 percent since November, while
China’s surplus fell by 67 percent. Exports are equivalent to 15
percent of the Indian economy, compared with more than 60
percent in China.

As Dondald Coxe remarked in his commetary a few weeks ago, the Indian election was a watershed for freemarket reform in India.
The country should enjoy very strong capital inflows going forward and the lack of dependence upon export trade should partially
insulate India from the global economic turmoil.

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