Exporters' body expresses concern over rupee surge

The Federation of Indian Export Organisations (FIEO) Monday said the sharp appreciation in the rupee is a cause of concern and called for intervention to manage extreme volatility in the domestic currency.

The Indian rupee surged by 57 paise on Monday to close at an over seven-month high of 68.53 against the US dollar, also marking a sixth straight session of gains, driven by sustained foreign fund inflows and narrowing trade deficit.

"Such sharp appreciation is causing concern both amongst the exporters as well as importers, as uncertainty in the exchange rate is driving volatility," FIEO President Ganesh Gupta said.

"Exporters who have contracted at Rs 74 to a dollar but could not hedge it due to non-availability of limit by banks, tend to incur huge losses," he said.

He suggested that extreme volatility should be managed through intervention so that the exchange rate continues to provide requisite competitiveness to Indian exports.

The rupee is set to appreciate further, giving a jolt to efforts to increase exports, and therefore it should be ensured that it remains near 70 to a dollar, Gupta said.

He termed the appreciation in rupee as another challenge for the exporters who are already struggling with contraction in global demand, liquidity challenge at the domestic turf and fierce competition from other competing currencies.