Exporters Jittery As Rupee Touches 3-Year High.

With rupee touching 36 month high today, exporters got jittery as they stand to lose on their net foreign exchange remittances.

The rupee closed 10 paise stronger at 44.08/09 -- a three-and-a-half months high -- against the US currency on increased dollar selling by banks. Intra-day, it touched 43.85 -- level last seen on August 29, 2008 when the rupee had hit a high of 43.71.

"It will affect margins of exporters particularly small and medium," Federation of Indian Export Organisations (FIEO) Director General Ajay Sahai said.

Exporters who have not hedged their currency risk would be affected more, Sahai said. Export markets for India, especially western economies, are passing through tough conditions, including debt related crisis.

"In such an environment, exporters are already doing business on tight margins. Now, if the rupee becomes stronger, their realisations will be hit," Sahai said.

India's exports during April-June this fiscal grew by 45.7% to USD 79 billion. Commerce Secretary Rahul Khullar had recently said that the country's exports may not sustain the growth rate of 40-45% in the coming months due to the uncertain economic conditions in the western markets.

The average export growth in the last five months has been over 40% and even touched 57% in May. However, a strong rupee has become an area of concern and make exports less price-competitive.

Source : moneycontrol.com