Exporters Say Weak Rupee Good News, But Wary Of Volatility.

Exporters see the fall in rupee's exchange value against dollar as a boon for them but are also worried about sharp fluctuations in the local currency's trade against the US unit.

Traders who got their exports realisation today turned out to be more lucky as the domestic currency tumbled by 66 paise to close at nearly a 14-month low of 47.22/23 against the US currency, meaning they earn more money. The rupee had closed at Rs 46.56 in its previous trade.

"A weak rupee is good for exporters, but it is too difficult to predict a trend when there is so much fluctuation in the currency market," Ajay Sahai, Director General, Federation of Indian Exporters Organisation said.

He, however added that sharp fluctuations in rupee-dollar mostly help speculators.

The falling of rupee is seen as "good news" when there is a demand slowdown in the US and Europe -- the traditional export markets of India.

Foreign exchange dealers said persisting demand for dollar from importers and banks in the wake of fresh signs of capital outflows weighed against the local currency.

"The rupee will continue to be vulnerable in short-term and it is very difficult to predict its movement. It may also go to 47.50 to 47.75 levels. In the medium-term, we expect it to play out well and factors like the ONGC FPO and FDI coming to India should help it go below 46 by 2011-end," Ananth Narayan, MD & Regional Head, Fixed Income, Currencies and Commodities, said.

Helped by an impressive 81.79% jump in exports in July, the outbound shipments during the first four months of the fiscal grew by 53.98% to USD 108.34 billion year-on-year.

Source : moneycontrol.com