Friday, July 22 2005 16:34 Hrs (IST) - World Time -

New Delhi: India today (July 22, 2005) said the revaluation of the Yuan would benefit its exports as it would make the prices of Chinese goods more 'realistic' and provide level-playing field for Indian exporters in global markets.

"With revaluation of the Yuan the artificiality in the prices of Chinese exports will not be able to last and there would be level-playing field for our exports," Commerce Minister Kamal Nath told reporters.

He, however, said the real impact would be known after seeing the implementation and knowing with which currency basket do they (Chinese) peg Yuan in next few weeks.

It still would have to be seen as how much would the Chinese government or their agencies continue to calibrate their currency artificially and only then could any assessment be made, Nath said on sidelines of a Council for Leather Exports function.

Till now Yuan was artificially pegged (with the dollar) and now that the Yuan would be linked to a currency basket, it would be more realistic, he said adding that textile exports should benefit with the removal of this artificiality.

Asked whether the Reserve Bank of India should intervene to manage the impact of the revaluation, he said in India Rupee takes its own course and it was for the Finance Ministry to take a call on it.

After intense international pressure, China had yesterday (July 21, 2005) scrapped the Yuan's peg to the US dollar and revalue the currency by 2.1 per cent to 8.11 Yuan to a dollar from 8.27 Yuan, a rate the Communist giant maintained since 1994.

China decided to reform the exchange rate regime by moving into a managed floating exchange rate regime based on market supply and demand with reference to a basket of currencies.

Later addressing the exporters, Nath said leather industry must seek to double exports from the country from the current level of 2.3 billion US dollar to 5 billion US dollar in three years.

"Effort must be to double the exports in next three years to occupy at least five per cent of world trade in leather within next five years," he said.

Nath said Government had already identified the sector as a thrust sector in the National Common Minimum Programme due to its large employment generating potential and added that there was a need to move on to the growth trajectory.