“All is not good” for Exports with Rupee Depreciation: FIEO President

“All is not good” for Exports with Rupee Depreciation: FIEO President

“All is not good” for Exports with Rupee Depreciation: FIEO President

 

Reacting to the Indian Rupee falling below the psychological mark of 74 against the dollar, immediately after the RBI announcement of status quo on the Repo Rates, Mr Ganesh Kumar Gupta, President, FIEOsaid that though Rupee has depreciated by over 13% in 2018, the trends in NDF market indicate that further fall is not ruled out particularly as short-term debt share in India’s external debt  is increasing.

However, the depreciation is also increasing cost of imported capital goods, inputs and various services used by exporters paid in foreign currency particularly the freight charges as shipping companies adopt exchange rate which is much above the market rate.

Mr Gupta said that buyers are asking for sizable reduction in prices, on account of Rupee depreciation, as depreciation of buyers’ currencies have also increased the landed price in their own country. The most vociferous are the buyers from Middle East, Africa and certain parts of Asia demanding deep cut in prices while such demands from buyers in US & Europe is sparingly received. This puts exporters in quandary, if he has hedged himself thus not benefitting from weak Rupee yet forced to cut prices.

The Rupee depreciation is further tightening the liquidity, explained FIEO Chief, as the foreign currency component of export credit already availed gets revalued at a higher value in terms of Indian Rupees resulting in the exporter being asked by the banks to reduce their exposure by part payment or where the export credit limit is not fully disbursed, the available limit reduces, depriving exporter of funds said Mr Gupta which is extremely bad for exporters.

President, FIEO said that extreme volatility in currencies should be stemmed to help the economy including exports.

Sources : portwings

Manjula

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