A year back exporters were crying over rupee’s unprecedented rise against the dollar…foreign investor’s money flooded Indian market and strengthened rupee to unseen heights (since a long time) of almost 39 per USD. While exporters were the worst hit as stronger rupee made their exports costly and thus lowered export revenues, many experts took the rupee rise a reflection of India’s strides and growing economic strength…
Today, the crying continues but reasons are just the opposite – rupee has seen sharp depreciation this season due to rising demand for dollar (by oil companies to make payment for costlier imports) and the outflow of the same FII money that had flooded India (due to capital market crisis in international market) – reaching the lowest levels in last two years at nearly 47 per USD.
Despite the rupee depreciating, not all exporters are excited – going by the last year’s trend, many players had hedged their export revenues at higher levels (around 41-42) compared to the current spot prices and thus they are losing out on the possible gains that they could have made today. Adding to the woes is the slowing US economy, which is still the largest export market for Indian exporters.
The good thing is that inflation may cool down as oil prices stabilise between 90-100 dollars per barrel. The relative closeness of Indian financial economy with rest of the world would also help the economy sail through the worst global financial crisis being witnessed today.
Today, the crying continues but reasons are just the opposite – rupee has seen sharp depreciation this season due to rising demand for dollar (by oil companies to make payment for costlier imports) and the outflow of the same FII money that had flooded India (due to capital market crisis in international market) – reaching the lowest levels in last two years at nearly 47 per USD.
Despite the rupee depreciating, not all exporters are excited – going by the last year’s trend, many players had hedged their export revenues at higher levels (around 41-42) compared to the current spot prices and thus they are losing out on the possible gains that they could have made today. Adding to the woes is the slowing US economy, which is still the largest export market for Indian exporters.
The good thing is that inflation may cool down as oil prices stabilise between 90-100 dollars per barrel. The relative closeness of Indian financial economy with rest of the world would also help the economy sail through the worst global financial crisis being witnessed today.
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