Weak rupee set to benefit seafood exporters in Kerala

October 10th, 2008 - 8:47 pm ICT by IANS  

Thiruvananthapuram, Oct 10 (IANS) Primary commodity exporters in the state are set to benefit with the rupee Friday crashing to its lowest level against the dollar in the last six years - to Rs.49 to a dollar.The last time the rupee fell to this low was in July 2002.

Kerala’s exports in the primary commodity sector include seafood and cashew.

In fact, according to trade circles, the sector that could feel some relief is that of seafood, which in the last fiscal saw export revenue slide from Rs.83.64 billion in 2006-07 to Rs.76.21 billion the previous year on account of a strengthening rupee.

Anwar Hashim, president of the Seafood Exporters Association of India, said even though the rupee weakened, barring some minor fluctuations, it would not make any tangible impact.

“See, when the rupee was becoming stronger and it reached Rs.39 during the course of the last fiscal, experts were saying it would touch Rs.35 and hence there was panic,” he said.

“Likewise, today, after a six-year gap, it has crossed Rs.49, and no one knows for how long this will remain. Only if this stays like this, there will be some benefit, a mere flash in the pan will not benefit anyone,” Hashim added.

Economist-Finance Minister Thomas Isaac said he was perturbed over what was happening to the rupee.

“If the rupee falls further, then there could be a run on the rupee and this means it would have lot of ramifications. The situation in the US is pretty bad and the argument that we can export more of seafood and cashew does not hold because there are limitations to production, and moreover, there is not going to be any increased consumption of such items also,” said Isaac.

But he said one major beneficiary would be the average non-resident Indians (NRIs), who by way of remittances would get more rupee being credited into their bank accounts here.

“This would not be true for NRIs who will keep the remittances in foreign currency and he has other avenues for parking funds. But certainly for the average Malayalee NRI, this is going to be beneficial, especially after a bad period during the course of the last one year when the rupee was getting stronger,” Isaac added.

It was sentiment echoed by Raj Mohan Pillai, brother of late biscuit king Rajan Pillai and chairman of the Beta Group of companies that also exports cashew.

“In the cashew business, the normal practice has been that when such a situation arises, buyers will lower the price. This will benefit exporters who have pending bills to be cleared from abroad. But here again, since the US is the biggest consumer of cashew, since things are bad there, the overall impact is that there won’t be much of a gain,” said Pillai.

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