Rupee rise not to create problems for exports: Comm Secy

The government today said rupee appreciation has not been "that sharp" as to hurt Indian exports, rebuffing exporters' claims that there was a need to curtail FII inflows into the economy, which are largely responsible for the appreciation against the dollar.

"Any sharp appreciation will hurt us. But I don't think there has been that sharp an appreciation to create a problem," Commerce Secretary Rahul Khullar told reporters here.

FIIs have been pouring in funds in large quantities, betting on the Indian economy, which is expected to bounce back to over eight per cent growth this fiscal.

The robust FII flows, which add up to $5.30 billion since January, had a salutary impact on the strength of the Indian currency.

The rupee has gained against the US dollar by close to four per cent since March 1.

Exporters who begun seeing growth again in November, after a prolonged lull, are a worried lot, as the dollar weakness reduces their net realisation in the local currency.

The President of the Federation of Indian Export Organisations (FIEO), A Sakthivel, has suggested pegging a fixed rupee-dollar rate for some period.

However, the Commerce Secretary did not agree that the problem was serious enough to merit such a step. "In 2007-08, when we had a difficulty, we had.... Dollar at around Rs 40. You are nowhere near that," Khullar said.

He was also in disagreement with exporters who saw evil in the FII inflows. "The stock market at about 18,000 Sensex is very good indication," Khullar said, which was in sharp contrast to Sakthivel's recent statement that, "FIIs are making short-term profits. There is a need to regulate their investment."

The local currency appreciated by 10 paise to Rs 44.35 against US dollar in the afternoon trade.