New Delhi: External value of rupee is far stronger than its internal strength which is hurting exporters as their competitive edge gets hit with declining value of dollar against the domestic currency, said an Assocham study.
Rupee is currently trading at 63.63 against 66.93 to a dollar in August, 2016. “So, clearly the external value of rupee has strengthened quite,” said the Asscoham paper. It said a stronger rupee has begun to bite exporters, as is evident in the falling pace of growth in shipments.
“No doubt, exports have been growing for the last nine months but as RBI has also observed that the export growth weakened in May and June from the April peak as the value of shipments across commodity groups either slowed or declined,” said Assocham.
“Exports have shown growth of 4.39 per cent to $23.56 billion in June 2017, as compared to $22.57 billion a year ago. But this growth had peaked at 20 per cent in April this fiscal. This deceleration in growth is visible in the subsequent months. Moreover, thanks to declining value of dollar, in rupee terms, during June 2017 exports had shown a negative growth of 0.04 per cent,” said Assocham.
The chamber said due to rupee appreciation there is an erosion in margins between 6-7 per cent and the trend is likely to continue on the back of robust inflows in the stock market.
“The inflows of dollar, taking the country’s foreign exchange reserves to record level of $392 billion, are a result of global liquidity flush finding ways into the financial markets of the emerging economies,” said Assocham secretary general, D.S. Rawat.
