Worried over an adverse impact on export earnings due to rising rupee against the US dollar, several north Indian export companies are mulling hedging against the volatility of the Indian currency.
Hedging in this context implies entering into an agreement for future transactions based on a specified value of the rupee against the dollar.
The export industry has been the worst affected during the economic crisis and was only starting to recover, but the rising rupee has come as a rude shock to the exporting community.
"We will certainly go for hedging if the rupee continues to appreciate against the US dollar and breaches a level of Rs 46...In order to minimise losses on export earnings," Ind-Swift Chairman G Munjal said.
Similarly, a company in the textile sector Malwa Industries is also weighing options to go for hedging to protect its margins against the appreciating rupee.
"If the downward trend of US dollar against rupee sustains or goes below the level of Rs 46, then we will hedge on some of our bookings," company President (Denim Business), Tarun Chawla said.
The textile company is one of the biggest exporters of denim fabrics and garments to Europe, the US and the Middle East.
The Indian currency is hovering around Rs 46.36 mark and has gained by Rs 1.50 in the last two days.
"With the appreciation of the rupee, our margins have been hit hard which is unsustainable..It (rupee rising) has happened when we are still struggling in view of meltdown impact," Panipat-based Handloom Exports Manufacturers Association President Ramesh Verma said.
Handloom exporters have asked the government to compensate the exporters in case of any downward fluctuations in the currency to safeguard the interest of the exporting community.
The Panipat-based handloom industry exports textiles amounting to a staggering Rs 4,000 crore annually.
Source : Business Standard