A strengthening rupee is likely to take its toll on the country’s exports, with exporters fearing that the rupee’s rise could trim down profit margins and hit export competitiveness. “Profits are bound to come down substantially,” said D.K. Nair, secretary- general, Confederation of Indian Textile Industries.
Profits could tank for the textile industry if rupee goes below 44 against the US dollar, he said.
This is indeed a matter of concern that needs to be watched closely, said T.V. Mohandas Pai, board member, Infosys. “It is high time the RBI steps in and addresses the issue. If the rupee continues to strengthen then it could have a negative fallout.”
However, analysts seem to offer a different view. “Many companies do maintain a foreign currency hedge. Also the appreciation has been gradual and the industry had earlier withstood a stronger rupee,” said D.K. Joshi, chief economist at rating agency Crisil Joshi.