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Weakening rupee may be positive for certain segments in short term

The weakening Indian currency may be positive for certain segments in the short term but global buyers may start asking for discounts if the unit would stay near the 70 mark. Indian Silk Export Promotion Council Chairman Satish Gupta has said that most of the export bills are made in dollar terms and such exporters will benefit from the conversion in rupee but buyers are very clever. Though, he noted that the buyers have so far not started asking for benefit of currency fluctuation to be parted with them in the form discount but it is likely that the buyer will start asking for discount while realising payment if the dollar stagnates around Rs 70.

CII Director General Chandrajit Banerjee has stated that unforeseen global events have led to sharp volatility in the rupee. He also pointed out that while India is getting clubbed with other emerging markets, they are confident that stability will emerge soon as India's sound fundamentals and strong growth is taken into account. Besides, Assocham Secretary General D S Rawat has cautioned that Indian economy would be able to absorb the rupee depreciation in the range of 69-71 to a dollar range to a dollar but anything above that level would have negative impact on inflation, import bill and would consequently impact the trade deficit. He also said that being a net importing country, India cannot afford to lose value of its currency much even if other emerging markets lose in a similar way. He added that stability should be the watchword and given the forex reserves of $400 billion, the RBI should remain on top of the situation.

Furthermore, Federation of Indian Export Organisations Director General Ajay Sahai has pointed out that the overall impact of the rupee's slide will be good but vary segment-wise. According to him, while the development will be positive on shipments from the marine, agro, carpet, handicrafts, leather goods, apparel and textiles sectors; segments like gems and jewellery, electronics and petroleum may gain less. However, engineering exports' body EEPC India Chairman Ravi Sehgal has said that the yo-yoing of the rupee and related volatility is further exacerbating uncertainty for exporters because any real impact on exports would get muted from factors such as all-round depreciation of currencies of all the Emerging Markets and increase in raw material costs for shipments.

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