Rising Re blunts exporters'' edge

Our Banking Bureau
23 June 2003

New Delhi: Although the extent of appreciation of the Indian rupee vis-à-vis the US dollar is not high compared with other currencies, the fact that some of India's competitors' currencies, such as that of China, Malaysia, Thailand, Taiwan and the Philippines, have either not appreciated or appreciated slightly less than India or simply depreciated has impacted adversely on Indian exporters, blunting their competitive edge.

This is revealed in a study made by the Indian commerce ministry's economic division in its latest Foreign Trade Update, a newsletter circulated to India's commercial representatives abroad.

Stating that the extent of appreciation is a very crucial determinant of export competitiveness, the study said the Chinese currency, Hong Kong currency and Malaysian currency have not appreciated between May 2002 and May 2003, the latest available position tracked.

It said appreciation of the Thailand currency is lower than that of India and of Singapore equal to India during the period under review, while the Taiwanese and the Philippines currencies have actually depreciated vis-à-vis the US dollar.

So the export competitiveness of these countries, which are the key competitors to Indian products, is likely to be higher than that of India, conferring on Indian exporters a distinct disadvantage.

However, the study said, the currencies have appreciated vis-à-vis the dollar for some developed countries like Italy which also compete with India in leather items and most of the European countries which compete with India in many manufactured items.