Indian exporters asked for discounts over falling rupee
Updated: Jun 10, 2013 05:41:33pm
New Delhi, Jun 10 (KNN) The Industry body has expressed concern over the fact that global buyers have been asking Indian exporters for 10 – 15 per cent discount in the wake of falling value of rupee.
The rupee today has touched a life-time low of 57.77 against the US dollar.
Reacting to fall, President, Federation of Indian Export Organisations (FIEO), M Rafeeque Ahmed, said that this kind of volatility may be good in the short term but would impact the long term interest of Indian exporters.
In a release he said that such high volatility creates uncertainty and speculation which hits both the economy and business confidence. In addition, the depreciating rupee will further widen the Current Account Deficit and increase both fiscal deficit and inflation.
"Global buyers are putting pressure for more and more discounts. They are asking for about 10-15 per cent. They want to re-negotiate the deals," said a media report quoting Director-General of FIEO Ajay Sahai.
"In the long-term, the volatility will add to the instability and speculation affecting the business confidence of exporters," he added.
Ahmed said that due to contraction in global demand and slowdown in advance economies, albeit encouraging employment data from the US, the depreciation has not benefitted Indian exports as can be seen from trade data.
Elaborating further, FIEO Chief said that buyers were asking for discounts or reduced prices while sectors such as petroleum, gems and jewellery, electronics, plastic products, with high import intensity, were impacted owing to increase in input cost.
Ahmed suggested that exporters hedge their risk in such a volatile situation and look for profitability from core business. Exchange benefits should be used as icing on the cake, he said.
However despite such a depreciating change seen in rupee, FIEO President expects no change in the RBI’s Policy stance as of now.
Meanwhile, Industry body Assocham said the sudden jerk in rupee was bad news for the economy as it would further increase the country's gold and crude oil imports, which, in turn, would widen the trade deficit further impacting the current account deficit.
India's trade deficit in 2012-13 has touched an all-time high of USD 190.91 billion compared to USD 183.4 in the previous fiscal. The country's exports in 2012-13 declined 1.76 per cent to USD 300.6 billion mainly on account of slowdown in the global economy.
Industry experts said that falling currency beyond a point was not good for the economy and there was a need for strong reform measures.
The rupee today plunged by 48 paise to hit its life-time low of 57.54 in early trade on heavy dollar demand and dollar gaining overseas on better-than-expected US jobs report. This crossed its previous all-time closing low of 57.32 touched in June-end last year.
The Finance Ministry said there was an unwarranted panic in the market and hoped it will settle down in some time. (KNN)
The rupee today has touched a life-time low of 57.77 against the US dollar.
Reacting to fall, President, Federation of Indian Export Organisations (FIEO), M Rafeeque Ahmed, said that this kind of volatility may be good in the short term but would impact the long term interest of Indian exporters.
In a release he said that such high volatility creates uncertainty and speculation which hits both the economy and business confidence. In addition, the depreciating rupee will further widen the Current Account Deficit and increase both fiscal deficit and inflation.
"Global buyers are putting pressure for more and more discounts. They are asking for about 10-15 per cent. They want to re-negotiate the deals," said a media report quoting Director-General of FIEO Ajay Sahai.
"In the long-term, the volatility will add to the instability and speculation affecting the business confidence of exporters," he added.
Ahmed said that due to contraction in global demand and slowdown in advance economies, albeit encouraging employment data from the US, the depreciation has not benefitted Indian exports as can be seen from trade data.
Elaborating further, FIEO Chief said that buyers were asking for discounts or reduced prices while sectors such as petroleum, gems and jewellery, electronics, plastic products, with high import intensity, were impacted owing to increase in input cost.
Ahmed suggested that exporters hedge their risk in such a volatile situation and look for profitability from core business. Exchange benefits should be used as icing on the cake, he said.
However despite such a depreciating change seen in rupee, FIEO President expects no change in the RBI’s Policy stance as of now.
Meanwhile, Industry body Assocham said the sudden jerk in rupee was bad news for the economy as it would further increase the country's gold and crude oil imports, which, in turn, would widen the trade deficit further impacting the current account deficit.
India's trade deficit in 2012-13 has touched an all-time high of USD 190.91 billion compared to USD 183.4 in the previous fiscal. The country's exports in 2012-13 declined 1.76 per cent to USD 300.6 billion mainly on account of slowdown in the global economy.
Industry experts said that falling currency beyond a point was not good for the economy and there was a need for strong reform measures.
The rupee today plunged by 48 paise to hit its life-time low of 57.54 in early trade on heavy dollar demand and dollar gaining overseas on better-than-expected US jobs report. This crossed its previous all-time closing low of 57.32 touched in June-end last year.
The Finance Ministry said there was an unwarranted panic in the market and hoped it will settle down in some time. (KNN)
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