Although exporters are keeping a close watch on the rupee, the current trend may help exporters facing problems due to the payment crisis from Iran, a key export destination for aromatic rice.
Ideally, a weaker rupee helps exporters, but its too early to assess the impact as most contracts were signed months back, said Vijay Setia, president, All India Rice Exporters Association. On Tuesday, the rupee closed at at 49.17 against the dollar.
Agricultural & Processed Food Products Export Development Authority (Apeda) data indicate the contracted volume of basmati exports in the first two quarters has appreciated marginally to 1.45 million tonne from 1.42 million tonne last year. In the longer term, the weakening rupee will help basmati exports, said Asit Tripathy, chairman, Apeda.
This fiscal, India is expected to export at least 2.1 million tonne basmati rice worth R10,582 crore, the figures achieved last fiscal.
A leading rice exporter said the cost of exports depend on the spot and futures prices when the contracts were entered into.
If rupee continues to stay weak for the next few months, we will benefit, an exporter said. New contracts are expected to be signed in November and December.
Sanctions on Iran have hit exporters in the last few months. Payments from Iran, Indias biggest basmati buyer, have slowed down due to a freeze in dollar transactions. Iran and Saudi Arabia make up close to 60% of basmati exported from India.
Last year, the market was dampened by excess stocks and payment issues with Iran. This year, exports have picked up,Ashwani Arora, joint managing director with LT Foods recently said.In 2010-11, India produced over 4.5 million tonne basmati rice on normal monsoons, up from 4 million tonne a year ago when drought-like conditions prevailed.
The government recently allowed exports of two million tonne of non-basmati rice, partially lifting a ban imposed in April 2008when food inflation soared.