Exporters raise concerns over a strong rupee eroding margins

Engineering exporters' body EEPC India today raised concerns over the strengthening rupee, saying it is eroding their competitive edge and urged RBI to ensure that the liquidity rush into the markets does not harm the country's fundamental strength in exports.
The rupee, on a winning streak against the US dollar recently, has however been weakening of late amid growing geo-political tensions and fears of a rate hike by the US Federal Reserve.
"The central bank should ensure that the liquidity coming in droves in the Indian equity and debt markets must not harm our fundamental strength in exports," EEPC India Chairman T S Bhasin said.

Since the first week of January, the rupee has gained close to 6 per cent, EEPC said, adding that it is significantly eroding exporters' margins as well as the competitive edge against India's trade rivals globally.
Bhasin requested the Reserve Bank of India and the government to keep a close watch on the situation saying exporters cannot afford such volatility with pressure of value erosion.
"More disconcerting is the fact that the rupee is gaining ground and eroding the exporters' competitive edge when exports have picked up smartly in the last few months," he said, adding that while engineering exports managed to grow by 47 per cent in February despite the rupee strengthening; if the situation persists, it would be tough.

"The rupee is certainly over-valued since the rally in the stock market at present is liquidity driven and not backed by domestic corporate earnings, even though about 7 per cent GDP growth holds good promise," Bhasin said.