All is not good for exports with rupee depreciation: FIEO

Exporters’ body, the Federation of Indian Export Organisations (FIEO) said 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. Ganesh Kumar Gupta, President, FIEO was reacting to the Indian rupee falling below the psychological mark of 74 against the dollar after the RBI announcement of repo rates remaining unchanged.

According to the statement, 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.

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. Buyers from Middle East, Africa and certain parts of Asia are demanding deep cut in prices while it is lesser from buyers in US and Europe. This will put exporters in quandary, if he has hedged himself thus not benefiting from weak rupee yet forced to cut prices.

He further added that the rupee depreciation is tightening the liquidity, 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.


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