More Rs Per Dollar But Exporters’ Sentiments Drop.

MUMBAI: The extreme mood swings being displayed by the rupee have been causing anxiety even to those who stand to make short-term gains.

Despite the fact that they derive more rupees to a dollar, exporters who despatch seafood, gold and garments abroad, all wish the Indian currency would stabilise given that such volatility impacts business sentiment in a negative way.

The dollar rose to a record Rs 54.30 on Thursday, prompting a rating agency to say that the depreciation in the rupee would support the profits of 70% companies its rates in India.

A prominent seafood exporter based in Colaba says, "There is no doubt that exporters stand to gain as they get more value per dollar. However , many businessmen tend to book the dollar in advance so they may cover themselves against loss should the rate rise to say, Rs 45-46 . They will not derive much from the current situation. I, for instance, booked my dollar for a rate of Rs 50, and now that it has fallen to Rs 54, I will actually have to pay a difference of Rs 4."

The largest volume of seafood from India goes to China , followed by the Far East and the Middle East. However , the current period is described as off-season , so export volumes are low.

Every trader wishes the government would intervene as a weakening currency sends out wrong signals to international buyers, causing an overall dent in buying sentiment. "I would prefer a stable rupee that stood solidly to the dollar than the little extra profit that I stand to make in the short term," says leather exporter Sachin Baban Shinde.

"One must think beyond oneself, and this situation is not good for the country."

Another industry caught in a similar situation is the gems and jewellery sector, which exports handmade ornaments to the Middle East, European Union and the United States.

"However, India also imports gold to the tune of 850-950 metric tonnes per year from places like Hong Kong, Singapore and London. So while doing so, we make losses as well," says Prithviraj Kothari, president, Bombay Bullion Association. "The market is extremely sensitive as the dollar stood at Rs 52 last Friday and rose to Rs 54.30 on Thursday. This instability does not augur well for the long term."

Source : timesofindia.indiatimes.com