Reversal of rupee's fortunes in the last 10 days has brought smiles back on the faces of Indian exporters whose competitive strength is growing in global markets against rivals from China, the Philippines and Thailand.
The Indian currency, which had made strong gains in excess of 10 per cent in 2007-08, started losing ground since April 30 due to increased demand for US dollar in importing crude oil at the skyrocketing price of over $120 a barrel.
Rupee has lost value against the greenback by about three per cent in the last 10 days, reaching a level of 41.8, resulting into commensurate increase in the realisations for exporters.
"Our competitiveness has gone up by 3-4 per cent and the traditional exporting sectors like textile, handicrafts and leather would stand to gain more," Federation of Indian Export Organisations (FIEO) President, Ganesh Gupta said.
Gupta said if exporters manage to execute orders at the current rates, they would be able to "quote more competitive prices as well as get more business".
The trend in the last few days has put the Indian exporters at an advantage against China, Thailand and the Philippines, whose currencies have appreciated in the recent past due to dwindling dollar.
The CII National Committee Chairman on Trade Sanjay Budhia said the rupee appreciating to about 41 to a dollar level would return some comfort level to the exporters and help them remain competitive.
"Some amount of recovery has given back the comfort zone to exporters. Those exporters who managed to survive in the international market despite rupee rise, can now sustain and come back even if there are not enough margins," he said.
The appreciating rupee augurs especially well for exporters who had not hedged their orders or taken forward cover when the rupee was at the 39 to a dollar level around November last year.
"The comfort zone depends on what percentage of the exports have been hedged," Budhia said.
With the weak rupee resulting into improved remittances, export target of 200 billion dollar, that looked ambitious till about a few weeks back, would become achieveable, Gupta said.
India missed its export target by $5 billion closing the previous fiscal with $155 billion. Slackening demand in the US, along with weakening of dollar against the Indian currency, was stated to be the main reason for exports growing at a pace less than the target.
The flaring up of crude oil to $126 level in the last few weeks has led to worries of the trade gap further increasing as the country meets 70 per cent of its oil requirements from abroad. Trade deficit for 2007-08 had shot up to $80 billion.