Chinese Yuan Devaluation is an Opportunity for India in the Long Term. There might be risk aversion for a short duration but in the long term foreign capital would flow to India given its relatively better footing amongst Emerging Markets.
China has devalued the Yuan to Boost the Economy in terms of Export Competitiveness. Devaluation of the Chinese Yuan would have negative consequences for Foreign Exporters as imports would get cheaper and exports would become expensive for them in comparison to the China’s trade.
Only 29% of the respondents answered correctly that Yuan Devaluation would bring more capital flows in India because it is seen as an economy with improving macroeconomic fundamentals with better growth prospects than other emerging market economies. Cheaper currency does not drive capital flows into any country but improving macroeconomic fundamentals definitely does attract more capital.
The INR has depreciated marginally against the USD after the Devaluation of the Yuan but foreign capital will come to India given its relatively better footing amongst Emerging Markets.
71% of the respondents expect the RBI to cut the key benchmark repo rate as INR would lose export competitiveness if it stays strong.