Stronger Dollar Good News for Indian Exporters

The strengthening of the U.S. dollar against the Indian rupee, which on Tuesday touched a 17-month high of Rs. 44.10, has been welcomed by Indian exporters who had to pay more for imported raw materials during the dollar’s downward slide, local traders said.

“The trend is certainly good for exporters who are in a competitive position at the present levels," President of the Federation of Indian Export Organisations (FIEO) Ganesh K Gupta told PTI.

In a similar vein, Mehul Choksi, chairman and CEO of the Gitanjali Group, told the media, “We import rough diamonds, paying for all our deals in cash. The rupee depreciation helps us pay out lower on imports than what we earn through exports, benefiting the industry as a whole.”

Reports suggest that some diamantaires who availed dollar finance during its downward slide may be hit by the reversal of this trend.

However, fluctuations in the exchange rate remain a cause of concern. While agreeing that the stronger dollar was good news for India’s diamond and jewelry exporters, already facing pressure due to the slowdown in the U.S. market, GJEPC Chairman Sanjay Kothari said he would rather have the rupee steady at 42-43. “It would give us a clear picture when we make our forward contracts,” Kothari said.

Because of the stronger dollar, India's total exports have grown by 22.3 percent in the first quarter of the fiscal year to $42.84 billion. Exports grew by 23 percent to $155.5 billion in fiscal 2007-08 despite the rupee appreciating by over 13 percent during the year.