‘Exporters may find euro to dollar transition tough’

Exporters are keen to use the Euro as a transaction currency instead of the US dollar, but will find the transition tough to negotiate, a FI...

Exporters are keen to use the Euro as a transaction currency instead of the US dollar, but will find the transition tough to negotiate, a FICCI survey on impact of rupee appreciation on exporters said.

Around nine per cent in FICCI’s survey said they would seek new markets to counter declining margins, and only five per cent said they would re-negotiate contracts to counter rupee appreciation.

No exporter interviewed had any inbuilt protective clause in their contracts, that could perhaps have saved them from unpredictable changes in (Rs-USD) exchange rates. ’’Protective clauses are not a standard practice and the reason could perhaps be because no one thought about such an appreciation,’’ FICCI explained.

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FICCI says the Euro is currently ’’the most preferred transaction currency for Indian exporters’’ who decide to shift their currency. Nearly 90 per cent of exporters interviewed cast their vote for the Euro, FICCI says. However, Indian exporters are ’’not at a strong position’’ when it comes to negotiating changes in billing currency, even in cases where the dollar standard is not universally applicable.

Most exporters were concerned over the rupee’s stability, including 73 per cent respondents who said they conduct transactions exclusively in dollars. The most significant impact of the appreciating rupee will be on margins, that were affected for 86 per cent exporters, says the survey. However, 50 per cent said they will cut costs to meet the decline, while 59 per cent said they also faced pressure on revenues.

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