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Rising value of rupee bothers exporters

Mar '07
Rising value of rupee bothers Indian exporters especially in industries like textiles, Information Technology and automobile.

Speaking exclusively to Fibre2fashion, Surinder Anand, Executive Secretary of Garment Exporters Association, said that minor fluctuations in exchange rate do not make much difference to the negotiations finalized with buyers as we have long term contracts for Spring/Summer and Autumn/Winter seasons.

Garment Exporters get seasonal orders, which give them enough time to evaluate the market and the value of the rupee before signing the contract. However, exchange rate fluctuation affect the value of cash flows received by exporters. The key factors that can influence exchange rates movements are relative inflation rate and interest rate.

If appreciation of rupee continues, it will slow down our growth rate of export. Therefore a careful assessment and close monitoring of the exchange rate should be undertaken to ensure that financial flows do not distort the trade incentives for exporters. What make the situation more difficult for the exporting Community is a rising inflation rate and interest rate. All these factors put together along with increase in transaction cost due to recent hike in taxes have made our exports uncompetitive in the International market.

If need arises, RBI should intervene in the currency market to curb undesirable movements, to help exporters.

Fibre2fashion News Desk - India

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