New Delhi: With the rupee hitting 74-mark for the first time ever, exporters said on Friday that sharp depreciation in Indian currency is not good for exports.
Exporters’ body Federation of Indian Export Organisations (FIEO) said that the depreciation is 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.
FIEO president Ganesh Kumar Gupta said that buyers are asking for sizeable 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 and Europe is sparingly received. This puts exporters in quandary, if he has hedged himself thus not benefiting from weak rupee yet forced to cut prices,” said Mr Gupta.
“The rupee depreciation is further tightening the liquidity as the foreign currency component of export credit already availed gets revalued at a higher value in terms of rupee 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 which is extremely bad for exporters,” he said.
Mr Gupta said that extreme volatility in currencies should be stemmed to help the economy including exports.
Reacting to the rupee falling below the 74 against the dollar, Mr Gupta said that though rupee has depreciated by over 13 per cent 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.
