Rice market: Exporters fear losing edge over Indian traders

FAISALABAD: While many have been jubilant to see the dollar depreciate sharply against the rupee, rice exporters, who have achieved a significant increase in exports, are worried that they may lose their competitive edge over Indian exporters in the international market. They fear that their shipments may plunge immediately if the rupee kept strengthening against the dollar. They had won back the international market from Indian exporters by improving quality standards and due to high rates of Indian rice. The exporters argue if they increase prices to recoup losses on account of the fall in dollar value, international buyers will again turn to the Indian market. At the current exchange rate of around Rs100 to a dollar, the exporters will sustain a loss of $100 to $150 per ton. At the old exchange rate, they were selling rice to international buyers in the range of $1,300 to $1,350 per ton against $1,500 for Indian rice. In the current fiscal year 2013-14, rice exporters have hitherto been enjoying gains in the world market. In the first eight months (July-February), rice exports rose 9% in volume and 15% in value. Among the exporters, small and medium-sized traders were particularly discouraged by the sudden fluctuation in the dollar-rupee rate. They believe the recent dollar movement will create obstacles to their deliveries, which have been committed in the past couple of months. Export orders were booked at Rs107 to a dollar, but when receipts arrive, they will be exchanged at the rate of about Rs99 against the dollar. “All of a sudden 7% depreciation in the dollar has dealt a blow to the exporters,” said Taufeeq Ahmad, a rice exporter, while talking to The Express Tribune. He said the exporters had temporarily suspended activities until sustainability returned to the currency exchange market. Many have been facing losses of millions of rupees for the past few days. “We are not interested in depreciation of the rupee, but at the same time we want the government to keep the exchange rate stable,” said Ahmad. Exporters are not sure where the dollar-rupee rate will settle down. There are so many theories doing the rounds in the market, which have made the exporters jittery. Ahmed suggested that the government should evolve a strategy in order to shield the exporters and stabilise the rupee at a rational level. Published in The Express Tribune, March 16th, 2015.