Indian exporters are exploring euro-denominated
trade opportunities in view of the strengthening of
the rupee, according to an FICCI survey.
Exporters were not viewing the recent strengthening
of the rupee as a short-term phenomena arising from
the RBI''s hands-off approach and non-intervention in
the forex market. They rather fear the rupee will continue
to maintain its current level over the next few months,
the survey noted.
A sharp rise in the value of the rupee against the dollar
over the past two weeks has delivered a sharp blow to
exports in price-sensitive segments such as textiles,
gems and jewellery, tea, spices, leather and marine
Exporters are considering various ways to tide over
the crisis, including increasing prices, using forward
contracts and switching to markets where the euro could
be used as a medium of exchange.
the strong rupee affected two-thirds of the exporters
interviewed, less than a third had resorted to a mechanism
that provides cover for currency exposure. Further,
most of the companies reported that in their agreements
with their foreign clients, there was no provision for
revision of rates in case of a sizeable adverse movement
in the exchange rate. Many exporters are contemplating
catering only to the domestic market for the time being.
were also on the lookout for clients and markets where
euro could be used as a medium of exchange rather than
the dollar. Some said they were trying for a shift in
the medium of exchange from the dollar to euro in their
existing contracts. A few exporters suggested that they
would be looking at a short period of validity of quotations
for greater safety.
to this is the threat from China where the Yuan has
remained constant against the dollar.
experts say a rise in the rupee not only takes the wind
out of exports but also sparks fears of cheap imports
flooding the domestic market.
overall exports grew a slower-than-expected 8.8 per
cent to $12.58 billion in March from the same month
a year ago as a stronger rupee weighed.