Stronger Dollar no Panacea for Export Growth: EEPC India
KOLKATA: India’s engineering export growth slackened to 9.4 percent in July even as the rupee continued to depreciate against the dollar during the month, demonstrating that a stronger dollar does not always lead to export momentum, the EEPC India said on Monday.
The Engineering Export Promotion Council (EEPC) of India said engineering exports had grown by 18.92 percent in April this year, 14.59 percent in May, 14.17 percent in June and then by 9.37 percent in July. “Our view has been that it is a stable currency which helps exporters, providing them with the predictability of dealing with the buyers. Any fluctuation and volatility on either side do not help,” council’s Chairman Ravi Sehgal said. The EEPC paper noted the rupee depreciated by 6.56 percent in July as compared to 5.19 percent in June. “But did exports grow at a higher rate too, and was there a currency depreciation advantage? No, exports in July, this year expanded at a lesser pace of 9.37 percent than 14.17 percent in June,” it explained.
In any case, the rupee depreciation to plus 71 to a dollar level in August should be seen in the context of January 2017, when the average exchange rate was Rs 68.08 to a dollar which reversed to 63.64 in January this year, it said in a statement. When the rupee was 68-plus to a dollar in January 2017, engineering exports grew by about 12 percent but when in the same month of 2018, when the rupee became stronger and exporters could have got the disadvantage of a weak dollar, these exports grew at a higher pace of 15 percent, the council said. It noted that a stable currency is the best bet for exporters. According to EEPC India, the present depreciation of the rupee should get a contextual perspective that it is not the Indian currency alone which has lost ground. Currencies of major emerging markets have seen value erosion against the US dollar, giving level-playing to exporters of all these countries. (IANS)