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Depreciating Lira does not enthuse exporters

25
Oct '08

Turkish textile and garment exporters, the major foreign currency earners for the country have long been complaining of the overvalued Turkish Lira. But since the last few days dollar and euro, both have been appreciating in value, but not to the satisfaction of these exporters.

The dollar has gained 29 percent and the euro 19 percent in the last fortnight. The exporters are lamenting that now they are unable to quote competitive rates to foreign buyers. The exporters are enticing their buyers who are delaying their orders due to the rise in exchange rates through price reductions or exchange rate guarantees.

Exporters are also worried about a slowdown in demand due to the depreciation and a possible rise in lending rates. They also warn that it would create more problems in the future if exporters quote their prices based on current exchange rates considering the volatility in the markets.

The exporters are facing pressures from their clients to cut prices due to the twin factors of drop in crude oil prices and the appreciation of the dollar and euro against the Turkish Lira. But experts aver that rise in exchange rates in the current scenario will not provide long term profits as lending rates are also expected to rise.

They say that they welcome the gain which is a boon for exporters, but since the change has come about due to the current economic global crisis, it is vey risky. The rise in the exchange rate though has made things difficult for those manufacturers and exporters who are dependent on imports for their raw material requirements.

Imports have become costlier, but at the same time prices of key inputs like petrochemicals have also seen a free fall on back of falling crude prices which has helped in balancing costs to a large extent.

The textile sector delivered a growth of 11.79 percent in the first seven months of 2008 corresponding to the same period in 2007. Exports from the industry grew from US $13.85 billion in Jan-July 2007 to $15.49 billion in the comparable period of 2008.

The sector is also responsible for contributing singlehandedly nearly 22 percent of all export revenues generated from the industrial sector for the country.

Fibre2fashion News Desk - India

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