Exporters upbeat but cautious as euro appreciates.

New Delhi: With the euro gaining $ 1.30 in the late European morning trading on Monday after assurances by European leaders to save the currency from falling apart, Indian traders who export a bulk of their products to that part of the world heaved a sigh of relief. In many export segments like garments, 50-70% of the invoicing is done in euro.

Director-general of apex exporters’ body, Federation of Indian Export Organisations (FIEO) Ajay Sahai said though the currency appreciated on Monday, it would be important to see whether it could be sustained over a period of time. “The efforts made by the exporters to save the currency show the urgency of the situation especially after the Greek crisis. Every effort needs to be put in to save the currency from depreciation,” he said.

A garment exporter based in Noida said usually over 70% of the invoicing is done in euro, the depreciation of the currency would leave the exporter with very little margins. “We do not take depreciation into cover hence any dip in the value of the euro eats into the margins,” he said. At the back of fears of the raging debt crisis in Greece, the euro sank as low as $1.2523 last week. The EU and IMF have pledged almost $1 trillion in total to protect the euro.

The vice-chairman of Apparel Export Promotion Council Praveen Nayyar said the exporters should adopt a wait and watch approach rather than jump the gun. “We need to see how the euro peforms in the next few months. The volatility has really hurt us and I don’t think the assistance by IMF is going to change much,” he said. Currently, Europe accounts for almost 40% of India’s apparel exports.

Executive director of Gem & Jewelery Export Promotion Council Sabyasachi Ray said Europe is a very important market for India and any signs of stability for the currency will benefit the exporters. “Europe is going to become a very important market for India. Signs of the currency appreciating is good,” he said.

Source : Financial Express