The Hindu Business Line : Strong rupee: Exporters want Govt to step in

New Delhi April 17 Faced with lower unit value realisation due to the strengthening rupee against dollar, the exporting community has sought Government intervention to help tackle the recent turn of events at the forex market.

Export organisations such as the Apparel Export Promotion Council (AEPC) have even appealed to the Government to "halt the appreciation of rupee".

The AEPC feels that the strengthening Indian rupee would be particularly detrimental to a low import intensive and price sensitive industry like clothing.

On its part, the Federation of Indian Export Organisation (FIEO) plans to advise its members, especially small and medium exporters, to go in for hedging instruments to cover their currency exposures.

"Although an appreciating rupee has beneficial effect on the economy and imports become cheaper, something has to be done (by the government) to help exporters," Dr R.K. Dhawan, FIEO (Northern Region), told Business Line.

Dual exchange rate

He also felt the time was ripe for a dual exchange rate system — pegged and floating — at which rupee can be exchanged for any foreign currency.

The fixed rate of exchange, which may be applied to exports, can be about Rs 45 to a dollar to provide competitiveness to exports. The floating exchange rate may be applied to imports, he suggested.

About 40 per cent of the export proceeds realised may be converted into fixed exchange rate while the rest may be converted at floating exchange rate, he said.

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