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Our Bureau

Comfort zone seen between Rs 43.5 and Rs 44

New Delhi April 25 Exporters are now jittery and feeling the heat of the strengthening rupee against the US dollar. With the rupee climbing to nine-year high, the exporting community has urged the Reserve Bank of India to intervene and halt the rupee's rise against the dollar.

They also want the RBI to have a mechanism wherein the rupee is allowed to move within a specified range for exporters.

The exporting community apprehends that the competitiveness of Indian exports might suffer more, if the rupee were to further strengthen against the dollar in the coming days.

"The Government and RBI must come to the rescue of exporters. The small and medium exporters are not equipped to handle such situations. Most of them cannot deal with forward contracts or hedge their forex risks," Mr Ganesh Kumar Gupta, President, Federation of Indian Export Organisations (FIEO), told a press conference.

Asked what would be the comfort zone on the value of rupee for exporters, Mr Gupta said that "anywhere between Rs 43.5 and Rs 44."

The exporters are suggesting that a range be fixed around a particular rate (say 3 per cent around Rs 44) and the rupee movement should be restricted within this range for exporters.

The rupee touched a new nine-year high on Wednesday (touched intra-day level of Rs 40.87 against the dollar) on the back of investors betting on continued capital inflows and some speculation that the RBI would not check rupee gains in order to tame inflation.

`Disappointing' policy

Reacting to the RBI's annual policy statement for 2007-08, Mr Gupta said that he was disappointed, as the policy did not have measures for the exporting community.

"We were hoping that the RBI would come up with measures to reduce the interest rate on export credit. There was also no directive to public sector banks to ensure that at least 50 per cent of the credit line allocated to exporters under the priority sector be given to small and medium exporters.

The Commerce Secretary had talked about this recently," he told Business Line.

More Stories on : Forex | Exports & Imports

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