Dec 21, 2024 (MENAFN via COMTEX) --
(MENAFN - KNN India) New Delhi, Dec 21 (KNN)
The Indian rupee's depreciation to an all-time low of Rs 85.10 per US dollar has brought a mixed bag of outcomes for exporters and import-reliant industries.
While sectors like garments, handicrafts, and engineering goods are poised to gain a modest 5-10 per cent, rising oil and commodity prices are neutralising benefits for import-dependent industries, including gems, jewelry, and electronics, trade insiders reveal.
Traditional export sectors such as textiles and leather are expected to reap immediate advantages from the weaker rupee.
"The rupee depreciation will benefit the entire textile chain, with around 50 per cent of the gain typically passed on to buyers," said Sanjay Jain, Managing Director of TT Ltd. Rakesh Kumar of the Export Promotion Council for Handicrafts forecasts a 2-3 per cent growth in handicraft exports.
However, the celebration is tempered by rising raw material costs and fluctuating global markets. Iron and steel prices, which surged 60 per cent in recent months, are eroding potential gains for engineering goods exporters.
"A 4-5 per cent rupee depreciation could lead to a 10 per cent growth in exports, provided raw material prices stabilise," said an exporter from the sector.
Moreover, sharper currency declines in competing economies, such as the Chinese yuan, Japanese yen, and Mexican peso, are challenging India's competitive edge. Buyers are increasingly demanding Indian exporters share their currency windfall.
In November, India's goods exports fell 4.9 per cent year-on-year to USD 32.1 billion, marking a two-year low. According to Federation of Indian Export Organisations (FIEO) Director General Ajay Sahai, only 15 per cent of exporters are unhedged, limiting their ability to capitalize on the rupee's depreciation.
Chief economist Madan Sabnavis of Bank of Baroda noted that while a weaker rupee typically supports exports, long-term benefits are undermined by inflationary pressures and global currency trends. He added,"A sharp fluctuation aids profitability, not competitiveness."
As exporters navigate volatile markets, the rupee's 2.2 per cent drop this year against the dollar underscores a transient advantage, amplified by global economic uncertainties and intensifying price pressures.
(KNN Bureau)
MENAFN21122024000155011030ID1109019063
COMTEX_461087206/2604/2024-12-21T06:41:34
