The Hindu Business Line : Exporters may turn to EU as rupee rises against dollar

New Delhi May 20 With the strengthening of the rupee against the US dollar, Indian exporters are exploring euro-denominated trade opportunities, according to a survey on exports conducted by the industry chamber FICCI.

A combination of factors such as rising cost of raw materials, hike in interest rates and appreciating rupee has eroded the confidence level of Indian exporters, according to the survey.

Margins of the exporters are getting squeezed to the point where some of them are contemplating catering only to the domestic market for the time being.

Participants to the survey have reported that exports in segments such as textiles, gems and jewellery, tea, spices, leather and marine products are extremely price-sensitive and the recent movement in the rupee's value has started impinging on their export performance.

The survey, which was carried out during April-May, drew responses from 304 companies.

The most severely hit were the small and medium enterprises that had neither the option of reducing their cost burden by resorting to external sources of finance such as external commercial borrowings nor the knowledge about how to safeguard and hedge currency exposure using sophisticated techniques such as forward contracts.

Adjusting to the phenomenon of rising rupee, exporters are on the lookout for clients and markets where the euro could be replaced as a medium of exchange for the US dollar.

This move on part of the exporters indicates that over the next few months the country's exports to the US may witness a slowdown, while exports to the EU may increase.

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