Rupee depreciation harming exporters: FIEO
New Delhi, Oct 6 (KNN) Though Rupee has depreciated by over 13% in 2018, the trends in NDF market indicate that further fall is not ruled out particularly as short-term debt share in India's external debt is increasing, said Federation of Indian Export Organization (FIEO).
The above statement was made after RBI announced status quo on the repo rates in the wake of falling Indian Rupee below the psychological mark of 74 against the dollar.
Reacting to this, FIEO President Ganesh Kumar Gupta said “the depreciation is also increasing cost of imported capital goods, inputs and various services used by exporters paid in foreign currency particularly the freight charges as shipping companies adopt exchange rate which is much above the market rate.
He said that buyers are asking for sizable reduction in prices, on account of Rupee depreciation, as depreciation of buyers' currencies have also increased the landed price in their own country.
The most vociferous are the buyers from Middle East, Africa and certain parts of Asia demanding deep cut in prices while such demands from buyers in US & Europe is sparingly received. This puts exporters in quandary, if he has hedged himself thus not benefitting from weak Rupee yet forced to cut prices, Gupta added.
The Rupee depreciation is further tightening the liquidity, as the foreign currency component of export credit already availed gets revalued at a higher value in terms of Indian Rupees resulting in the exporter being asked by the banks to reduce their exposure by part payment or where the export credit limit is not fully disbursed, the available limit reduces, depriving exporter of funds, said Gupta which is extremely bad for exporters.
He suggested that the extreme volatility in currencies should be stemmed to help the economy including exports.