The Reserve Bank of India has asked exporters to convert half of their foreign exchange earnings kept in bank accounts into Indian rupee to prop up the worst-performing BRICS currency. However,the order has not gone down well with the exporters.
P D Sharma,president of Apex Chamber of Commerce and Industry,said,MSMEs make substantial exports for the country. This provision will highly affect their exports. The current situation is basically caused by fundamental macroeconomic weaknesses.
He said balances were retained only for a short period as the sales/purchase cycle was continuous. Earnings in other currencies such as pound and Euro were normally used for meeting overhead and other expenses. Therefore,the RBI order would cause a great loss to the MSME sector,which does not have the skill to handle foreign exchange risk.