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Rupee depreciation to benefit apparel exports
01
Dec '16
The fall in Indian currency is a boost for export of garments, but for a short term. This depreciation will be fruitful to the export industry only if the situation continues for a longer duration. The rupee had plunged to a record low of 66.246 against the US dollar on November 8, 2016 before recovering to settle at 68.395 on December 1, 2016.

One of the reasons for decline in rupee value is outflow of money from prospective foreign investors, said the representatives of textile associations.

“The fall in Indian rupee is good news for the export industry. With the rupee depreciation and rise in dollar value, we are expecting improvement in the export of garments, at least for short run. But, India will be at loss if there is greater fall in values of currencies from other major emerging markets,” Ajay Sahai, Director General and CEO of Federation of Indian Export Organisations, told Fibre2Fashion.

“Rupee depreciation has definitely helped garment-oriented exports. However, the gain is only for a short-term as we have been experiencing this kind of situation since last few years where the rupee falls by the end of the year end and the value begins to increase within few days. Hence, most of the exporters are a bit unhappy with this rupee depreciation. The issue with short-term depreciation is that buyers who place the order in the next term use the old value to negotiate. We lose price due to uncertainty of our money value,” said Raja Shanmugham, president, Tirupur Exporters’ Association.

While talking to Fibre2Fashion, Shanmugham added, “Fearing such a situation in the future, a large number of the garment exporters took forward cover as a hedge against currency instability.”

“Market situation of the Western countries is also not good. Savings rate has also improved in the US and Europe. As of now, consumers are spending very low on garments. Hence, fall in rupee value is just a ray of hope to catch up with the export business. It will benefit us only if the situation sustains for a longer term,” said Rakesh Vaidya, former chairman of Apparel Export Promotion Council. (RR)

Fibre2Fashion News Desk – India


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