Economy

Rupee Strengthening

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In the last 3 to 4 months, Indian Exporters are loosing sleep due to Rupee Strengthening by over 10% in a quarter. Though certainly in the long run it is good for the country to let Rupee appreciate – such a speedy appreciation is affecting all exporters. In software exports, this clearly wipes out nearly 50% of the profit (assuming the average of 20% profit in Indian Software services industry).  I feel government is using this as an effective and probably only (non-controversial for Left parties) tool they have in controlling inflation. I believe it is up to individual exporters to device their own startegies to tackle, right from using tools like Hedging (which will help in short run from further appreciation) and to increase the rates and diversifying markets. All these are easily said but for small and tiny exporters especially for Non-IT exporters it can be very difficult and a matter of survival.

Yesterday Infosys Q1 FY ’08 results proves that the problem is serious enough. Though their revene have grown by 7.5%  in Dollar Terms; the revenue in Rupee terms has remained constant around Rs.3500 crores.

In this connection, instead of saying more I would like to refer you to this superb interview with Mr.Lakshmi Narayanan (Vice-Chairman of CTS). No one could have said it better. And that’s what I admire about Mr.Lakshmi Narayanan, his ability to see the issue not only from the biggies perspective but from the entire industry’s spectrum. Read the interview in PDF format: “Rising Rupee a Blessing for China

Just when I was about to post this, I saw a story on governments relief package, I am yet to study it so I will talk about it in a later post.