Global buyers ask exporters for discounts on falling rupee

With rupee touching a life-time low of 57.77 against dollar, global buyers are putting pressure on exporters to offer discounts between 10% and 15%.

The Federation of Indian Export Organisations (FIEO) said the continuous fall in the domestic currency would not help exporters much as international buyers are asking for discounts.

"Global buyers are putting pressure for more and more discounts. They are asking for about 10-15%. They want to re-negotiate the deals," Director-General of FIEO Ajay Sahai said.

"In the long-term, the volatility will add to the instability and speculation affecting the business confidence of exporters," he added.

Industry body Assocham said the sudden jerk in rupee is a 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 $190.91 billion compared to $183.4 in the previous fiscal. The country's exports in 2012-13 declined 1.76% to $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 is an unwarranted panic in the market and hoped it will settle down in some time.

The rupee witnessed some weakness during the second week of February to early March and saw subsequent appreciation during April 2013. Rupee started its downward journey against the dollar in May and hit 11-month low levels.