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Rising export might handle strengthening rupee, say observers

Rupee is 3rd-best performing currency in Asia against dollar behind South Korea's won, Taiwan Dollar

New Delhi 

exports, imports, trade,

A strengthening might not hit exports, which grew 17 per cent in February, in the near term, and economists believe.

The on Thursday was at a 17-month high against the dollar, despite the US announcement on hiking interest rates. Maintaining a strong position over recent months, the has risen by 3.4 per cent till date this calendar year.

On the other hand, rising for a sixth straight month, posted the highest rate of rise in a little more than five years. Outbound trade touched $24.5 billion in February; it was $20.8 bn in the same month last year, according to data issued by the commerce and industry ministry on Wednesday. 

"The rise in happened in spite of no support from the side," said Ajay Sahai, director-general of the Federation of Indian Export Organisations. He believed would continue to improve, although a major rise in the could upset this.

The is the third best performing in Asia against the dollar, behind South Korea’s won and the Taiwan Dollar, that have risen 5.4 per cent and nearly five per cent, respectively.

graph
The strong performance of the Modi government in successive key elections is counted as an important reason, among others, for sustaining the faith of foreign investors in the

“From a trade perspective, that is a difficult position for India, as it is only the emerging market economy which has seen its appreciate,” said Madan Sabnavis, chief economist at CARE Ratings.

However, on Wednesday, the US increased its policy rate by 25 basis points, to a range of 0.75 per cent to one per cent. Economists suggest the rally in the could slow down over the coming months.

The sudden rise in in February has been attributed to a low base effect, as well as increasing crude oil prices, which boosted the export of engineering goods and petroleum products, two of India’s major foreign exchange earners.

"Global commerce is more dependent on demand than the valuation of currencies," said Devendra Pant, chief economist, India Ratings. Overall, global demand conditions are slowly improving, he added. 

On the other hand, the strengthening is also a sign of the getting stronger, which will also raise its capacity for import. This is expected to augur well for India, since that country is our second largest trading partner and largest export destination. Total bilateral trade was $109 billion in 2015-16, with a commitment by both nations to raise it to $500 bn. Of this, merchandise trade was $62 bn, with from India a little more than $40 bn.

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Rising export might handle strengthening rupee, say observers

Rupee is 3rd-best performing currency in Asia against dollar behind South Korea's won, Taiwan Dollar

Rupee is 3rd-best performing currency in Asia against dollar behind South Korea's won, Taiwan Dollar
A strengthening might not hit exports, which grew 17 per cent in February, in the near term, and economists believe.

The on Thursday was at a 17-month high against the dollar, despite the US announcement on hiking interest rates. Maintaining a strong position over recent months, the has risen by 3.4 per cent till date this calendar year.

On the other hand, rising for a sixth straight month, posted the highest rate of rise in a little more than five years. Outbound trade touched $24.5 billion in February; it was $20.8 bn in the same month last year, according to data issued by the commerce and industry ministry on Wednesday. 

"The rise in happened in spite of no support from the side," said Ajay Sahai, director-general of the Federation of Indian Export Organisations. He believed would continue to improve, although a major rise in the could upset this.

The is the third best performing in Asia against the dollar, behind South Korea’s won and the Taiwan Dollar, that have risen 5.4 per cent and nearly five per cent, respectively.

graph
The strong performance of the Modi government in successive key elections is counted as an important reason, among others, for sustaining the faith of foreign investors in the

“From a trade perspective, that is a difficult position for India, as it is only the emerging market economy which has seen its appreciate,” said Madan Sabnavis, chief economist at CARE Ratings.

However, on Wednesday, the US increased its policy rate by 25 basis points, to a range of 0.75 per cent to one per cent. Economists suggest the rally in the could slow down over the coming months.

The sudden rise in in February has been attributed to a low base effect, as well as increasing crude oil prices, which boosted the export of engineering goods and petroleum products, two of India’s major foreign exchange earners.

"Global commerce is more dependent on demand than the valuation of currencies," said Devendra Pant, chief economist, India Ratings. Overall, global demand conditions are slowly improving, he added. 

On the other hand, the strengthening is also a sign of the getting stronger, which will also raise its capacity for import. This is expected to augur well for India, since that country is our second largest trading partner and largest export destination. Total bilateral trade was $109 billion in 2015-16, with a commitment by both nations to raise it to $500 bn. Of this, merchandise trade was $62 bn, with from India a little more than $40 bn.

image
Business Standard
177 22

Rising export might handle strengthening rupee, say observers

Rupee is 3rd-best performing currency in Asia against dollar behind South Korea's won, Taiwan Dollar

A strengthening might not hit exports, which grew 17 per cent in February, in the near term, and economists believe.

The on Thursday was at a 17-month high against the dollar, despite the US announcement on hiking interest rates. Maintaining a strong position over recent months, the has risen by 3.4 per cent till date this calendar year.

On the other hand, rising for a sixth straight month, posted the highest rate of rise in a little more than five years. Outbound trade touched $24.5 billion in February; it was $20.8 bn in the same month last year, according to data issued by the commerce and industry ministry on Wednesday. 

"The rise in happened in spite of no support from the side," said Ajay Sahai, director-general of the Federation of Indian Export Organisations. He believed would continue to improve, although a major rise in the could upset this.

The is the third best performing in Asia against the dollar, behind South Korea’s won and the Taiwan Dollar, that have risen 5.4 per cent and nearly five per cent, respectively.

graph
The strong performance of the Modi government in successive key elections is counted as an important reason, among others, for sustaining the faith of foreign investors in the

“From a trade perspective, that is a difficult position for India, as it is only the emerging market economy which has seen its appreciate,” said Madan Sabnavis, chief economist at CARE Ratings.

However, on Wednesday, the US increased its policy rate by 25 basis points, to a range of 0.75 per cent to one per cent. Economists suggest the rally in the could slow down over the coming months.

The sudden rise in in February has been attributed to a low base effect, as well as increasing crude oil prices, which boosted the export of engineering goods and petroleum products, two of India’s major foreign exchange earners.

"Global commerce is more dependent on demand than the valuation of currencies," said Devendra Pant, chief economist, India Ratings. Overall, global demand conditions are slowly improving, he added. 

On the other hand, the strengthening is also a sign of the getting stronger, which will also raise its capacity for import. This is expected to augur well for India, since that country is our second largest trading partner and largest export destination. Total bilateral trade was $109 billion in 2015-16, with a commitment by both nations to raise it to $500 bn. Of this, merchandise trade was $62 bn, with from India a little more than $40 bn.

image
Business Standard
177 22