Dollar influx hits exporters hard

Mumbai, Nov. 23: The phenomenal rise of the rupee in the recent past, following the massive influx of foreign funds into the domestic stock markets, has hurt the exports sector badly, the Federation of Indian Export Organisatio-ns (FIEO) said on Monday.

The rupee has strengthened against the American greenback by about 4.8 per cent during the past few months, while it has hit a 150-month low on November 11 against the major world currencies.

“It is estimated that the rupee may strengthen to around 44 to a dollar, creating difficulties for the MSME export sector, which is dealing with a price-sensitive, recession-hit global markets,” the FIEO president, Mr A. Sakthivel, said.

The US government has indicated keeping interest rates low for the next 12-18 months to spur growth, which would lead to massive inflows of a weakening dollar into India through carry-trade and increase inflationary pressures in India and other emerging markets. “The foreign funds purchasing $15.77 billion in Indian stocks this year has resulted in the appreciation of the rupee by 4.8 per cent,” Mr Sakthivel said.

He said other emerging markets such as Brazil and Taiwan have imposed controls by way of taxes on such inflows.