Drip Capital, a California and India based Fintech Company, providing collateral-free post-shipment finance to SME exporters with instant approvals and minimal documentation was founded by Pushkar Mukewar and Neil Kothari with a philosophy to solve the working capital gap for SME exporters across emerging markets.
Pushkar Mukewar, Co-Founder and Co-CEO, Drip Capital opined on Impact of falling Rupee on Exports, during the recent meeting.
“The Indian Rupee has been on a downhill slide for most of the year, falling for six months straight, the longest stretch since 2002. Since 2013, the Rupee has lost around 20.8% against the US dollar. Common perception is that devaluation in currency means good times for exporters, because they end up selling more as their goods/services become cheaper in the international market. However, there are several factors at play that mean that exporters see the negligible positive impact of a falling rupee, such as import dependencies, damping because of global supply chains, increased profit hedging, etc. For example, there are trends that show that trade impacts the value of a currency, rather than the other way around. The rupee depreciation rate in June this year was 5.19% while the export growth was 14.17%. However, when the rupee further fell sharply to 6.56% the next month, the export growth in fact reduced to 9.37%. This is because we import materials like crude, rough diamonds, gold, and precious metals to manufacture our major export commodities. Factors such as this mean that Indian exporters might actually see only minimal impact of the rupee’s continued devaluation.”
