Increasing troubles in Euro zone economies are worrisome for
Indian exporters but in the short run,
rupee weakening to a 15-month low has proved a blessing in disguise for them.
Exporters have an inverse relationship with rupee movement. Erosion in its value translates into higher realisations for exporters on conversion of their US dollar earnings into the domestic currency.
Bulk of India's export realisation is denominated in the US currency.
"A weak rupee is good for exporters," Director General of the Federation of Indian Exporters Organisations (FIEO) Ajay Sahai said. However, given "so much fluctuation" in the currency movement, it would be difficult to predict a trend, he said.
Rupee closed to 47.59/60 to a US dollar on Tuesday, lowest since May, 2010. As the stock markets fell around the world and capital flows were reversed from the emerging markets, including India, rupee lost by more than two per cent against USD in the last one week.
Chairman of the Export Promotion Council for Handicrafts (EPCH) Arvind Vadhera agreed. "Exporters will definitely benefit...It is a good news for them".
For exporters, September and October are generally considered good months when the consignments peak in the run-up to Christmas.
But the Chairman of the Engineering Export Promotion Council (EEPC) Aman Chadha felt that weakening of rupee would help only small traders who do not hedge against currency movements.
The currency related gains for the exporters come at a time when the dream run on the shipments seems difficult to sustain.
While for the April-August the consignments were up 54.2 per cent at $134.5 billion, the August expansion was lower than July.
In the medium-to-long run, problems in Europe would have ripples for India, as the continent is the country's largest export destination.
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