Indian industry looked confused over the issue whether the RBI should intervene in order to protect exporters from the gaining rupee or not.
As per CII, the domestic industry would have to accept a strengthening rupee in the short term, whereas, FICCI, Assocham and FIEO fancies RBI to check the sharp climb in the currency.
On Thursday, rupee closed at an eight-year high of 42.90/92 against the US dollar. Such a raise is point of concern for the profits of exporters, especially software companies.
CII President R Seshasayee said, “While the supply side measures take effect, industry might have to accept appreciation of the rupee in the short term, even if it means that exports are hurt a bit.”
Ganesh K Gupta, President, Federation of Indian Export Organization said, “We are terribly disturbed because of the rise in rupee. While large exporters can protect themselves by hedging, the smaller ones would be hit hard. RBI must buy dollars to protect the country's exports.”
FICCI and Assocham also asserted that exports, especially in the IT sector and labor-intensive sectors such as textiles and leather, must be protected.
FICCI Secretary General Amit Mitra said, “Rupee has been hardening for a long time and even in a short run of three to six months, exports have to be taken care of.”
Assocham expected RBI to keep a close eye on the situation and make sure that exports do not suffer. Its Secretary General DS Rawat said, “RBI should not be a mere spectator and intervene at appropriate time to take corrective measures.”
North Indian exporters also articulated their concern, saying, similar slips of the Indian currency will drastically impact their business in the near future. And the upward movement of rupee against the US dollar would make their goods more expensive in the overseas market, hence adversely impacting their future exports.
“Strengthening of the rupee is particularly detrimental for the low import intensive and price sensitive terms such as textiles especially when competitors such as Pakistan has not witnessed a similar currency appreciation,” the chamber said.