Exporters are in trouble again, according to a Federation of Indian Chambers of Commerce and Industry (FICCI) survey on exports.
The chamber states that concern and uneasiness are back among exporters due to the variation in exchange rates.
Concerns are also mounting because of the evolving situation in the euro zone which is resulting in a risk of slowdown in exports to that region.
The survey, which was conducted in April and May 2010, saw participation from 278 companies with a wide geographical and sectoral spread. The turnover of the companies that participated in the survey ranged from Rs 1 crore to Rs 1,40,000 crore.
The survey reveals that large sideways movement in the value of the rupee against the US dollar and euro has led to severe problems.
“While the sudden appreciation in the value of the rupee affected the margins adversely as it led to lower realisation for exporters, the recent decline in the value of rupee caught exporters off guard and they lost on account of forward contracts that were booked to hedge currency risk,” stated the FICCI survey.
Measures taken
FICCI says exporters are taking various measures to counter the currency fluctuation. Dedicated forex/treasury teams are being put in place by exporters to tide over the situation. Negotiations are also ongoing with clients to develop new and dynamic pricing models built in sales contracts to take care of currency fluctuations.
Finally, some exporters who can afford to do it are not converting their dollar receivables into rupees, as the exchange rate risk at this point is simply too high.
The respondent exporters to the survey told FICCI that the central bank should give a facility like that in China of a fixed exchange rate.
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