SME Times News Bureau | 05 Apr, 2010
The Federation Of Indian Export Organisations (FIEO) on Monday said that higher dollar inflows from Foreign Institutional Investors (FIIs) has created rupee volatility, which in turn, severely impacting the country's export sector.
Commenting on the dollar inflows to the country, FIEO President A Sakthivel said, ".... the competitiveness of the exports would be eroded severely resulting in the labour loss and closure of many units."
Sakthivel pointed out that the FII’s March investments in stocks was at a six months high of $4 billion in equity and $2.2 billion in debt markets.
With the quantum of inflows increasing, containing volatility may be difficult for the Reserve Bank of India (RBI) to match current account deficits with inflows to maintain some parity in the rupee, he added.
The FIEO President stated that the last time around in 2007, the dollar inflows were around $ 40 billion which resulted in the volatility of the rupee in spite of the RBI’s stepping in with MSS operations etc.
He elaborated that considering that the inflation is around 9.89 percent analysts believe that appreciation in the rupee is more than25 percent.
The FIEO chief urged that FII inflows should stay in India for a period of 2 years.
