Tirupur exporters feel the heat

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R. Vimal Kumar

Major exporters

sell products

to chain stores

Worry over fluctuations in rupee-dollar rate

TIRUPUR: Knitwear exporters are keeping their fingers crossed over the slowdown in the U.S. economy and wide fluctuations in the rupee-dollar ratio during the last few months, according to A. Sakthivel, President, Tirupur Exporters’ Association and Chairman of Federation of Indian Export Organisations (FIEO) (Southern Region).

In an exclusive chat with The Hindu, he said the collapse of some of the major financial institutions had worsened the economy in the U.S.

“We are keeping our fingers crossed considering that about 50 per cent of knitwears produced now finds its market in the U.S.,” he said.

However, Mr. Sakthivel was of the view that exporters would not lose much money from the products already sold even if the U.S. market entirely collapsed.

“About 60 per cent of the knitwear exporters are doing safe business by selling their products to chain stores through ‘Documentary Credit or Letter of Credit’. Only those who are supplying to the U.S.-based importers, who in turn supply to other buyers, have to be scared of losing their money, if the situation worsens”.

Another area that worries knitwear exporters would be the wide oscillation in the rupee-dollar rate.

Mr. Sakthivel pointed out that after a sudden appreciation of the rupee against the dollar in March this year, hitting a low of 38.24, the currency then depreciated to touch 45.78 during the last week of September.

“Exporters are not going to get the benefit of the recent depreciation in rupee value since they have already booked the orders many months in advance,” he pointed out. The appreciation of the rupee against the U.S. currency even curtailed the buoyancy witnessed in garment exports since the abolition of quota in 2005.

“There has been a steady 15 per cent growth in exports in the first two fiscals after the phasing out of quota, only to register 10 per cent negative growth last fiscal,” he said.

To hedge against the sudden undulations in the rupee-dollar ratio, as far as possible, exporters had been entering into forward contracts.



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