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Tamil Nadu
Exporters fail to cash in on a resurgent euro
M. Gunasekaran
TIRUPUR: The recent spurt in euro to Rs. 63 from Rs. 58 has not brought smiles on the faces of exporters here.
Not expecting such an appreciation, the exporters had already entered into forward contracts for Rs. 59 a month back.
If an exporter entered into a forward contract the bank will provide him/her the amount fixed in the contract irrespective of the market fluctuation.
“I am at unable to understand the market. During the same period the previous year we incurred losses for not opting for forward contract and the euro fell to Rs. 55. This year we are going to face losses again because we went for hedging,” says an exporter.
Knitwear exporters here have been scouting for euro to tide over the losses following the depreciation of dollar against rupee. To an extend they have succeeded in expanding their share in the stable European market and managed to improve their business in euro terms. Of the Rs. 11,000 crore exports, euro accounts for close to 30 per cent.
According to industry sources, most of the exporters who have been dealing with European buyers and doing business in euro are not in a position to reap the benefits of an appreciating euro. If an export firm want to come out of the contract, it has to pay the difference between the present rate and rate at which it entered into contract. A senior manager of a nationalised bank, who encouraged his clients to opt for forward contract to save themselves from currency fluctuations, termed it a notional loss.
He said that strengthening of euro may not continue for long. Tirupur Exporters’ Association president A. Sakthivel said that exporters were not hugely affected by opting for hedging.
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