Apparel Online India Magazine July 2nd Issue 2018 | Page 45

INDIA CANVAS
Sliding rupee may
not help exporters!
T
he rupee has been sliding
consistently since the beginning
of this year and if a poll conducted
by Reuters is any indication,
global trade tensions and rising
oil prices are expected to weaken
India’s rupee over the next year.
The country is in a very unique
situation, and even as the economy
continues to grow, the rupee is
weakening against the dollar hitting
an all-time low of 69.09 per dollar
in the first week of July. Also, the
rupee has the dubious distinction
of being the worst-performing
currency in Asia this year.
While economists deb ate the
impact of the situation, most are
happy to note that the panic which
accompanied the 2013 slump
in rupee is absent this time, as
the volatility is not a reflection
of India’s macro fundamentals,
like it was in 2013. In fact, many
are looking at the scenario as
a positive impact on exports, a
critical driver of the ‘Make in India’
movement that aims to attain
export competency. 
Yet, not everyone is convinced.
Banikinkar Pattanayak,
Financial Columnist with The
New Indian Express believes that
the declining rupee will provide
limited relief to exporters…
“Thanks to a fall in the currencies
of emerging market peers, an
escalation of a global trade war,
the absence of credible domestic
reforms to cut huge logistics costs
and high import intensity in some
key segments like petroleum and
gems and jewellery.”
Even experts in the textile and
garment industry, though admitting
that the weakening of the rupee
against the dollar will help
exporters, are sceptical on just how
much benefit will actually accrue.
“The currency position is definitely
positive for exports; however, the
actual impact will not be as much
as the depreciation because our
competitors like China, Bangladesh
and Pakistan have also depreciated.
It’s the net impact which will decide
the exports positivity extent,”
Indian Rupee has
been one of the
major depreciating
currencies since
2012 as compared
with neighbouring
manufacturing
powerhouses. Only
the Sri Lankan Rupee
has underperformed
the Indian Rupee.
The Bangladesh
Taka has remained
consistent with small
fluctuations, as has
the Korean Won,
though the Vietnam
Dong has seen
intermediate strength
and weakness.
reasoned Sanjay Jain, MD,
TT Ltd.
Also, it is widely accepted that
buyers too are now well informed
of options and the advantage that
could accrue does not really come
in. “General perception is that
depreciation of rupee will lead to
exponential gain for exports. The
reality is that gains are limited;
exporters now tend to hedge
against risks of currency volatility,
so exporters fix their margins.
Also, foreign customers are well
aware of the situation and bargain
on weak rupee, re-negotiating
on the prices which eventually
minimises gains,” concluded
Jaspal Dehal, CEO, Majestic
Global, a Buying House in Noida
having customers in Australia,
Germany, Switzerland and USA.
www.apparelresources.com | JULY 16-31, 2018 | Apparel Online India
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