Date:09/04/2007 URL: http://www.thehindubusinessline.com/2007/04/09/stories/2007040902091400.htm

Back Rising rupee has exporters worried, says study

Our Bureau

New Delhi April 8 The recent appreciation in the value of the rupee against the US dollar has caused anxiety among exporters, according to a survey conducted by the PHD Chamber of Commerce.

As per the survey findings, exporters are perturbed by the fall in resultant profits. The international buyer is not willing to pay the exporter the extra price accruing from currency appreciation. The appreciation percentage has hence to be borne by the exporter, which in turn lowers his export proceeds and serves to erode his profit margin, the survey finds. Exporters also complain of incurring a loss between the period of invoicing and realisation of proceeds on account of rupee appreciation.

The strengthening rupee is particularly detrimental to the low import intensive and price sensitive industries such as textiles, especially when competitors such as Pakistan have not witnessed a similar currency appreciation.

IT revenue impact

Similarly, the revenues of IT companies are expected to take a hit and would lead to a pressure on their margins on account of rupee appreciation, according to the chamber.

Exporters of capital goods find that they have to bear the double whammy of having to put up with the cost escalation arising out of the rising rupee and the recent build-up in domestic prices of inputs of items such as steel, copper, aluminium, and zinc on account of inflation. These developments have put capital goods exporters in a very tight position in international bids.