At a World Economic Forum session on the rupee’s rise here on Sunday, Rahul Bajaj, chairman, Bajaj Auto Ltd, said that while his company’s motorcycle exports have not yet suffered, the margins had come down almost to zero.
The rupee has appreciated against the dollar by around 13% since January.
Gerard Lyons, chief economist and group head, global research, Standard Chartered, said at the same session that the Indian currency could appreciate to Rs30 to the dollar, but it was time it was viewed against a basket of currencies, and not just the dollar.
But despite an appreciating rupee, which makes goods produced here relatively more expensive overseas and leads to lower value realizations since up to 80% of the billing is in dollars, India’s exports rose surprisingly faster by 35.6% in October over the same month last year, to $13.3 billion (Rs52,801 crore), edging ahead of the 24.3% increase in imports over the same period to $20.79 billion.
This was the fastest rise in exports in the past 15 months.
As a result, trade deficit increased marginally to $7 billion from $6.9 billion a year ago, data released by the ministry of commerce said.
Commerce secretary G.K. Pillai had earlier said that the country’s annual export target of $160 billion would be missed.
Exports during April-October this year has risen 21% over last year to $85.6 billion.
Rajeev Malik, executive director, Asia markets research, JPMorgan Chase Bank, said, “The rupee will retain a strengthening bias over the medium term owing to robust capital inflows and continued hedging of receivables by exporters.”
Ajay Sahai, director general of the Federation of IndianExport Organizations, had earlier said that exporters were trying to avoid currency riskby hedging.