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Trade: Exporters breathe easy as rupee finally depreciates |
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The depreciation in rupee has brought back the smile on exporters’ faces. The garment, chemical, ceramic and other exporters have heaved a sigh of relief after the dollar bounced back.
A significant number of exporters, however, believe that the rupee will gradually strengthen and stabilise against the dollar and drop anchor between the Rs 39 and Rs 40- mark. “It is matter of pleasure for all exporters. For all those who have indulged in forward hedging, there will be no immediate gains. However, their profit margins will improve in the coming 4-6 months,” said Arvind CFO and director Jayesh Shah.
Talking about the Arvind Group, Mr Shah said, “Due to rise in prices of cotton and fuel, the profitability of our group will remain stagnant for the next six months. However, as the new cotton season is expected to be very good, our profit margins for the remaining part of this financial year is likely to improve by 3-4%,” he said.
In all of 2008, the rupee has depreciated by 9% against the dollar. About 7% of this has happened during the past 20 days. On April 21, the rupee stood at Rs 39.80 to a dollar, while on Thursday, it fell to a one-and-half-year low of Rs 42.71. The rupee closed at the same level.
The garment manufacturers said that they have got the necessary tonic to sustain themselves in the market. Generally the profit margin in this industry remains between 10% and 15%, which dipped to 5%. However, with the new scenario, the margins are likely to shoot up to 12%”, said Abhay Shah, managing director of AR Tex Apparels.
Chemical exporters from Gujarat are among the happiest. Since the rupee began appreciating, the chemical industry has chosen to go in for short term contracts. After the dollar bounced back, they feel a strong dollar will propel their profit margins in the next three to six months.
The ceramic industry has already started gaining because of the rupee depreciation. According to sources, the industry had started exporting 300 containers per month as against 200 containers till April this year.
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