labels: economy - general
Chidambaram urges exporters to get used to strong rupee news
08 August 2007

New Delhi: Finance minister P Chidambaram has called upon exporters to get used to operating in an era of a stronger rupee instead of expecting more sops from the government to compensate them for declining margins.

They say that the rising rupee has made the $160-billion export target for the current year difficult to achieve as overseas sales growth has been gradually declining from 23 per cent in April to 14 per cent in June.

In July the government had announced a Rs1, 400-crore package to compensate exporters for the decline in their margins due to a stronger rupee, but exporters are still asking for more.

While commerce and industry minister Kamal Nath yesterday supported exporters saying that the government was thinking of a new package for them, the finance minister has said there could not be a situation where the economy grows but the rupee, remains weak. He told exporters to factor this in their pricing while booking new orders.

"We have taken note of the short-term pain of exporters and we have given them a package. No developing economy can say I do not want capital inflows into the country. China does not say that. We have to learn to manage these inflows. It is difficult... It exacts a cost. But we must factor all that and learn to manage inflows," Chidambaram said.

Chidambaram said the rupee had become strong against the US currency because the dollar had weakened.

The rupee has appreciated about 9 per cent from the lows of Rs45 to a dollar in October-November 2006, to just above Rs40 as it has been strengthening since March due to the rising inflow of funds and Reserve Bank of India not buying dollars in its efforts to curb money supply and inflation.

India''s reserves have risen to about 225 billion dollars thanks to huge inflows from foreign institutional investors, who remain optimistic on Indian stock markets, and foreign direct investments going into industry and services.

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Chidambaram urges exporters to get used to strong rupee