Mumbai: Reserve Bank Deputy Governor K C Chakrabarty on Wednesday said the apex bank was concerned about the
volatility of the Rupee and not its appreciation or
depreciation.
"We are not too much concerned about the Rupee going up
or going down. We are concerned about its volatility. The
volatility has to be managed. It has to be managed by the
market players," Chakrabarty told reporters on the sidelines
of a MSME knowledge conclave organised by ICICI Bank here.
The Rupee has risen over 10 per cent against the dollar
and is trading at below Rs 47 at present from Rs 52.17 in the
first week of March, 2009.
Federation of Indian Export Organisation has already said
the appreciation of the Rupee would have a negative effect on
exporters.
"As the Rupee rises, importers are very happy, while
exporters are concerned. We are not too concerned about it. As
a policy-maker, we can't take any side," Chakrabarty said.
However, the Deputy Governor said the Rupee was more
stable as compared to the Yen and on a long-term, the apex
bank was happy the way the Rupee was moving.
Highlighting the importance of the MSME sector,
Chakrabarty said if the country was to grow at 9-10 per cent
rate on a sustained basis, the MSME sector had to perform.
"If at any point of time MSMEs have a bright future, I
think that is today. Interest rates are at an all-time low,"
he said, adding that inclusive growth was also not possible
without the MSMEs.
ICICI Bank's Managing Director and CEO Chanda Kochhar
said the bank contributes 20 per cent of the total private
sector lending to the MSME sector and said this had been
growing and would continue to grow.
Rising rupee worry exporters
Over 10 per cent rise of rupee
against the US dollar has become a "big worry" for exporters
at a time when they saw arrest in sharp decline in the
country's exports amidst a hope of recovery.
The dollar is trading at below Rs 47, weakening by over
10 per cent from Rs 52.17 in the first week of March 2009.
"The appreciating rupee will have negative effect on
exporters, who are already facing lack of orders," Federation
of Indian Export Organisations President A Sakthivel said.
He said weak dollar results in falling margins for
exporters as their rupee realisations drop, which in turn
affects their negotiating power with the global buyers.
"Appreciating rupee is a big worry ... we were getting
help from strong dollar," Chairman of Council for Leather
Exports Habib Hussain said.
Though dollar has seen a sharp decline against major
currencies of the world, bulk of India's trade is done through
the US currency.
Exports have been declining since October 2008 under the
impact of recession in the world's major economies. However,
the contraction in exports, which dipped by 30 per cent in
March and April, reduced to 19.4 per cent in August this year.
The government has announced several sops for exporters
who contribute about 17 per cent to the country's gross
domestic product. The sops included interest subsidy of two
per cent on bank finance.
Bureau Report
First Published: Thursday, October 08, 2009, 00:40