Ramu Deora Sees Re At 42 Vs $ By Year-End

Federation of Indian Export Organisations (FIEO) president Ramu S Deora said yesterday the rupee value should be at 42 to a dollar by the end of 1998.

FIEO has arrived at this figure on the basis of the Reserve Bank of Indias statement late last year that the rupee was overvalued by 10-15 per cent. Hence, the rupee will depreciate by about 1-1.2 per cent monthly.

Deora, who was here to meet local exporters, said exporters were comfortable with this steady depreciation.

An FIEO (southern region) study on the opportunities and challenges in exports from the southern region was also presented during the meeting.

 

Outlining an agenda for the new government, Deora said political stability was crucial to revive confidence among exporters.

A consistent trade, tax and fiscal policy and a non-volatile exchange rate will help exporters formulate long-term plans and strategies.

FIEO has revised its estimate of export growth for 1997-98 to 17 per cent from the earlier 30 per cent.

According to the FIEO, export growth up to November 1997 was at 14.1 per cent. The usual trend of fourth quarter performance being better than the third quarter was unlikely to be repeated this year.

The South-East Asian crisis and the rupee volatility have shaken the exporters confidence, Deora said.

Political instability led to uncertainty on the policy front, thereby worsening the situation, he added.

Gem and jewellery exports, the largest contributor to total exports in value-terms, have been the worst hit as nearly 40 per cent of exports are headed for Japan and South-East Asia. The number of exporters closing down in the Santa Cruz Export Processing Zone is increasing, he said.

Deora said the situation in the entire East Asian region was so bad, that even credit extended to importers is not coming back. Remedial measures can be taken only when actual loss complaints or details are filed with FIEO, he added.

While exporters who have taken cover with agencies like the Export Credit Guarantee Corporation can claim relief, others may have to bear the loss.

Exports of chemicals, pharmaceuticals, garments and commodities (especially rice) have been affected by the South-East Asian developments.