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Rupee fall to help exports rise by up to 10%
The rupee has shed almost 3.5% against the US dollar this year and 3.2% since Russia's military operations in Ukraine on February 24. It fell to a record 77 against the dollar on Tuesday. Oil prices have soared to the highest, about $139 per barrel, since 2008 amid the Russia-Ukraine conflict.
Indian exporters of carpets, handicrafts and engineering goods expect up to 10% benefit from the ongoing rupee depreciation. Sectors with a low dependence on imports stand to gain while others will lose their benefits to higher oil and commodity prices, they said.
The rupee has shed almost 3.5% against the US dollar this year and 3.2% since Russia's military operations in Ukraine on February 24. It fell to a record 77 against the dollar on Tuesday. Oil prices have soared to the highest, about $139 per barrel, since 2008 amid the Russia-Ukraine conflict.
"A weak rupee is only a temporary relief and not a long-term benefit because iron and steel prices have gone up 60% in the last two months. However, we expect a 4-5% rupee depreciation to translate into a 10% growth in exports if the raw material prices don't increase further," said Ravi Sehgal, managing director of Kolkata-based engineering firm Carnation Industries Ltd.
"Higher metal and oil prices will get neutralized by a depreciating rupee. We expect a 2-3% growth in exports," said Rakesh Kumar, director general, Export Promotion Council for Handicrafts.
India's merchandise exports in April-February 2021-22 were $374.05 billion, up 45.8% year-on-year while imports rose 59.21% to $550.12 billion. As per Sidh Nath Singh, director of Mirzapur-based Carpet Handicrafts Export, woollen carpets have a 10-12% dependence on imported wool and dyes, and the amount of rupee depreciation is directly proportional to the export gains.
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