China’s devaluation of its currency is a “worrying” development for India’s flagging exports, and could lead to a surge in imports from its northern neighbor worsening the country’s trade deficit with China, said India’s trade minister Nirmala Sitharaman

While the government would not rush into any action, it had discussed likely steps it could take to counter an expected flood of cheap steel imports with domestic producers and the finance ministry, she said.

Indian containerport

The comments came a day after to the People’s Bank of China set the yuan midpoint rate at 6.5646 per dollar prior to the onshore market open, 0.50 percent weaker than the previous fix 6.5314. It was the biggest fall between daily fixings in five months and the eighth day in row for the PBOC to set a lower guidance rate. The depreciation sent regional currencies and global stock markets tumbling, as investors feared it would trigger competitive devaluations

My deficit with China will widen,” she told reporters.

On Friday, the PBOC moved the yuan a shade higher. It set the yuan reference rate at 6.5636 against the dollar, up 0.02 percent from Thursday’s fix and higher than the Yuan’s closing rate of 6.5929 in onshore trading on Thursday. Friday’s fix was the first time in nine days that the PBOC set the yuan reference rate higher.

India’s trade deficit with China stood at about $27 billion between April-September last year compared with nearly $49 billion in the fiscal year ending in March 2015, reported Reuters.

India steel companies such as JSW Ltd have asked the government to set a minimum import price to stop cheap imports undercutting them, said Reuters. A similar measure was adopted in 1999.

“We have done ground work but are not rushing into it,” Sitharaman said when asked if India would impose a minimum import price for steel.

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