Dollar hoarding of exporters on account of further depreciation of rupee

MUMBAI: Expecting to benefit in case of further depreciation of the rupee, Indian exporters are strategizing to hold dollars instead of selling them. The rupee is expected to fall to 84.50 against the dollar.

The rupee has now collapsed to 83. In view of the depreciation of the rupee against the dollar, bankers and brokerage houses are advising their exporter clients to hedge the rupee against the dollar a little or not at all. It is currently difficult to say at what level the rupee will stabilize, an exporter said.

As per the Reserve Bank guidelines, an exporter can retain his income earned from abroad in his foreign currency account for a specified period.

Exporters usually hedge around 45 to 60 percent of their projected revenue, but this has come down to 18 to 20 percent now.

The US Federal Reserve is raising interest rates while on the other hand, crude oil prices are also holding firm, putting pressure on the rupee against the dollar. Foreign institutional investors are withdrawing their investments from India amid concerns of a global recession.

Exporters benefit from rupee weakness. More rupees are available against the dollar. Exporters are choosing to hold on to the dollar for a longer period of time, as the rupee continues to depreciate, the exporter said.

The Reserve Bank is constantly intervening to prevent the rupee from depreciating. In the current year, the rupee has fallen by 12 percent against the dollar.