Overvalued Rupee Seen Hurting Export Units
An overvalued rupee is contributing to a slowdown in exports, representatives of the countrys export industries said on Thursday.
The rupee is overvalued at a time when exporters costs have been rising, N K Goyal, chairman of the Federation of Indian Export Organisations (FIEO), said.
FIEO represents export organisations from the textile, engineering, chemical, jewellery and other sectors that make up the bulk of Indian exports.
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Look at how the dollar has moved up against the mark and the yen in recent months, said Ramu Deora, chairman of the Chemicals, Pharmaceuticals and Cosmetics Export Promotion Council (Chemexcil), a constituent of FIEO.But the rupee continues at 35.88 (against the dollar), Deora said.
After trading steady at 31.37 to a dollar for nearly two years, the Indian currency started weakening in mid-1995. It touched a record low of 38.50 against the dollar in February 1996, but soon gained in value again to 34.0 in March.
The rupee has been stuck in the 35.88/89 range in recent weeks.
The independent Centre for Monitoring Indian Economy (CMIE) said that during the current 1996/97 financial year (April-March), export performance deteriorated with each quarter.
Exports grew by 13 per cent in the first quarter, 5.7 per cent in the second quarter and one per cent in the third quarter, it said in its January review of the economy.
My exporters feel they could have done a lot better if the exchange rate was Rs 38 to a dollar, Deora said.