The strengthening rupee following the interest rate cuts by the US Federal Reserve has started worrying the textiles and chemicals exporters from Gujarat, who are terming it as a double whammy in light of the prevailing challenges in the international market.
After the US Fed cut interest rates by 50 basis points, Asian currencies rebounded against the dollar, and the rupee hit a two-month high on Thursday.
The rupee ended at 83.68 against the dollar and touched 83.57 during the intra-day, the strongest level in the last months.
Rahul Shah, co-chairman of the textile taskforce of the Gujarat Chamber of Commerce and Industry (GCCI), said, “The textile industry is already losing its competitive edge in the international market due to higher cotton prices. Indian cotton is around 25% costlier than international cotton, which has significantly impacted the yarn, fabric, and garment exports in the last few months.”
He added that the Indian Rupee may gain strength in the coming days, but eventually, it will stabilize above the 84 level. Similarly, the chemical industry is also watching the rupee movement closely. Bhupendra Patel, chairman of CHEMEXCIL (Gujarat region), said, “The chemical industry has been struggling for a year due to weak demand. There has been a slight improvement in the last few months, but due to high raw material prices, there has been an impact on the production.” Recently, the rupee touched the 84 level, and it increased our competitiveness in the global markets against China.
However, the currency came down to the 83.60 level, and there is a possibility that it would rise further due to the inflow of funds into India, Patel explained.
