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Are Indian exporters gung-ho of gain in dollar?
28
Oct '08
The Indian rupee has depreciated to nearly Rs. 50 against the US dollar. But are the Indian exporters rejoicing? No, is the answer to the million dollar question. The reasons are not far to seek.

The reason put forth by exporters is that it has come at a wrong time. They do not expect to be rewarded with the fruits of the gain in the dollar, as new orders have dried up and they also expect a slowdown in the future too due to the ongoing crisis.

The recession across the globe is not generating new orders and at the same time buyers are demanding additional discounts of up to 20 percent. So the benefits are limited according to them.

At the same time, some exporters say the depreciation of the rupee and when most of the other currencies are also depreciating against the weak dollar has come in a period of economic turmoil across the globe which makes it all the more risky.

A fall in the dollar rates which has gained so much in a very short period is expected so they are also scared. Prices quoted on rates as of date could put them in grave risk of losing a lot of money if the dollar was to plunge against the rupee.

Memories of the last few months are also strong in the minds of these exporters. When the rupee was appreciating against the dollar and had touched Rs 39 to a dollar, these exporters had hedged their future receivables on expectations of a further fall.

But the rupee took a U turn in the following months and those exporters who had hedged their future foreign exchange earnings lost out heavily on their transactions. This has made the exporters wary now to the sudden depreciation of the rupee.

But again as there are pessimists, there are a few optimistic too. This positive but small group says they that they are better placed than their northern neighbours, China. The reason being that the Chinese economy is more dependent on its export sector than India.

Though the dollar has gained by more than 10 percent against the Indian rupee in the last few days, the euro has seen a fall of nearly 5-6 percent in the corresponding period. So exporters to the US if they are wily enough, stand a chance of reaping good profits, exporters to the EU may need to compromise on their prices.

Fibre2fashion News Desk - India

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