The Hindu : Front Page : Knitwear exporters happy over surging dollar

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Friday, May 23, 2008
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Knitwear exporters happy over surging dollar

M. Gunasekaran

TIRUPUR: The sudden surge in the exchange rate of the dollar against rupee by 7 per cent to 8 per cent has brought cheer to knitwear exporters.Though the rise in the dollar value to Rs. 42.70 from less than Rs. 40 in two weeks has put the exporters in an advantageous position, most of them are not in a position to reap the benefits immediately as they had gone in for forward contract fearing further depreciation of the dollar when it went below Rs. 40.

According to sources in the banking sector, a section of exporters who had not covered their currency reserve fully would stand to benefit now. Tirupur had registered a negative growth of around 10 per cent for the first time in the last two decades and its turnover dipped to below Rs. 10,000 crore during 2007-08 from Rs. 11,000 crore the previous year owing to strengthening of rupee against dollar.

Exporters had never faced a situation of falling dollar as it was always on the rise vis-a-vis rupee. Expansion of garment units had come to a standstill and the city witnessed job cuts. Though the dollar surge after a gap of more than a year brought some respite to the struggling industry, exporters are still apprehensive.

A common refrain of exporters The Hindu spoke to was: it is a welcome development but we have to wait and watch as to how long this trend will last? Tirupur Exporters’ Association president A. Sakthivel says it should stabilise at the rate of at least Rs. 42.50 so that Tirupur will have a better turnover. The impact of this rise will be known only after two or three months.

N. Chandran of Eastman Exports says that the city cannot get back the orders it has lost to its competitors due to currency rate. “We want to see whether it will stay for a longer period at this rate. Only then can we see benefits in the long run. The rise of dollar is definitely a healthy sign,” he adds.

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