New Delhi, Aug 13 (KNN) The back to back depreciation of Yuan by China’s Central Bank for two days in a row, is the portent full-fledged currency war between competing and powerful economies of the world, said a study.

According to a "Quick Check" analysis by the ASSOCHAM, sharp currency depreciation, the steepest by over two decades, will have a three-fold impact for India.

Commenting on the surprise move by China which has spooked the global currency and stock markets, the chamber said that ironically this war would catch emerging economies like India in the middle.

For one, there is going to be a lot more volatility around the rate of rupee, as is seen today with the Indian currency touching its lowest since September, 2013 forcing intervention by the Reserve Bank.

Secondly, Indian exports which are already under a huge pressure in major markets of the world, would see further erosion in their competitiveness as the Chinese would become much more aggressive in their desperate moves to shore up their economy.

Thirdly, if the Indian rupee is not able to keep pace with Yuan in losing value, China will further dump goods into the Indian market, making the trade deficit further widen, said the chamber.

Indian central bank along with the government and the industry must also make a move that can not only withstand the pressure from China, the US Fed but take advantage of the fast changing situation,” it said. (KNN Bureau)