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Letters: Rise of the yuan

With reference to Shyam Saran's article, 'Renminbi's growing global influence'

Business Standard 

Rise of the yuan

With reference to Shyam Saran’s article, “Renminbi’s growing global influence” (June 14), it was possible for the currency to achieve international status because of the strong urge of the Chinese to excel in trade. It is such an economic activity that forces countries to exchange goods and develop a convenient mutual payment system.

The reason the US dollar was given official recognition and international status for payment was because that country was the largest producer and consumer at that time and its currency was expected to move freely across the globe.

In behaving like a non-market economy, China has succeeded in adjusting the in close relation to the dollar to boost exports and attract foreign investors. Its foreign exchange reserve is stupendous. This was possible only with high productivity and intervention in financial markets for almost three decades.

Once it achieved record-breaking export numbers and earned the faith of countries trading with it, the International Monetary Fund declared an international currency under stipulated conditions.

Unlike other reserve currencies, the has not given up its intervention in the stock market and the foreign exchange market because of fear that the exports base would get eroded.

The financial sectors and the real economy in the US are functioning without intervention from the administration. Even the power to create dollars is done with greater autonomy to the Federal Reserve and still the entire world benefits with the required liquidity. Countries no doubt have stagnated in terms of growth but were not completely dejected when the financial crisis occurred in 2008.

All countries are waiting for a signal from the US and not from China, because the dollar has still the same sheen as before. If the Belt and Road Initiative (BRI) succeeds as envisaged, several countries would be sharing the fruits of BRI. Earlier, the Regional Comprehensive Economic Partnership had received full support from partner countries.

At present, all eyes are on China; combined efforts are likely to give the renminbi even more confidence in the future. For India to achieve the same recognition is difficult because it is challenged on territorial integrity, lacks a consistent political will and has poor human resources management.

R K Arya, Faridabad

Govt owes explanation

With reference to the report, “India cuts a sorry figure in Mallya case” (June 14), barrister Aaron Watkins, appearing on behalf of India, pleaded in the extradition court that he had not received necessary evidence from the Central Bureau of Investigation (CBI). This is after an adjournment. 
It is criminal neglect on the part of the government to default in such a manner. The prestige of the country is at stake. The government owes an explanation to the people. It should do the following things immediately:

a) Ask the CBI director to explain why this happened.
b) Fix responsibility on officers for the fault.
c) Get all papers immediately, give these to Watkins and ask the extradition court for an early hearing. At present a date has been set in December. 
d) Transparently tell the country what progress is being made.

Sukumar Mukhopadhyay, New Delhi

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