Indian rupee has once again lost significant ground against dollar over last few days. The development reflects that de-leveraging continues in international markets as the global economic crisis deepens further. Changing fortune of rupee however has come as a rescue to the exporters.
Marred by the global demand slowdown amidst languishing recession in west, the exporters will certainly take relief in the fact that rupee has touched Rs 50 mark against dollar. However, significant gains will only accrue of the currency remains weak for some time, at least over next few months.
Another problem is that many exporters had hedged the currency at higher levels fearing further appreciation in rupee. These will certainly be unable to take the advantage of fresh weakness in the rupee, at least in short term.
Most currency watchers believe that rupee will continue trading range bound, but with lower side risk, against the dollar in near term. The news does cheer exporters, though they contend that volatile currency was no good for their already shrinking realisations and will wait to see rupee staying low for few months before celebrating.
Indian exports have fallen substantially over last few months as the consumer spending and hence demand went down in key destinations like Europe and US. During the quarter ended December, India’s exports fell by about 10% while the same are apprehended to have gone down by more than 20% in January.