The R17,800-crore Tirupur Exporters’ Association (TEA), the knitwear capital of India, has knocked on the Reserve Bank of India?s door, seeking its immediate intervention in checking the rupee from gaining any further against the dollar.

Fearing a possible hit in export margins owing to the continuous gain in the rupee, the association has sent a letter to RBI governor Raghuram Rajan asking him to take adequate measures.

“We wish to note that after clear-cut results in the polls for formation of a stable government at the Centre, the rupee has been gaining against the dollar on a daily basis and touched R58.57 on Monday. It is widely expected that the currency gain will continue in the coming days, which may not augur well for the knitwear exporters of Tirupur,” said A Sakthivel, president, TEA.

“We must note that Tirupur knitwear exports regained growth only last year after facing flat or downside growth in the previous four years. Even now, only the exporting units, mostly in SMEs, have regained business confidence and have been putting maximum effort to sustain and increase exports in the global market,” he added.

In response to a question, Sakthivel told FE: “In the last few days, the Indian currency gained substantially against the US dollar owing to rise in stock market indices. However, the current rise in the market is purely speculative in nature and most investments flow have been aimed for short-term gain. The real pricing is not happening.”

According to him, the sudden gain will make garment exporters lose R8 on a dollar and most exporters have already contracted for exporting at R61 or R62 a dollar. “It is time for the RBI to (intervene) by selling dollars in the open market, given $300 billion forex reserves… to see the rupee stands at R61 against the dollar,” he said.

Sakthivel also pointed out that India’s main competing country China is maintaining its competitive advantage by calibrating its currency, and Bangladesh, being a least developed country, has the advantage of zero customs tariff in the European market. “Hence, we need a level playing field to sustain in the global market,” he said. “It is pertinent to note that the poll victory has given a stable government, which will lead to continued foreign exchange inflows. And high interest rate differential between the US treasuries and Indian bonds will help attract flows into India, which will hit exporters further,” Sakthivel added.

The TEA had exports of R17,817.08 crore in the fiscal ended March 31, as compared to R13,709.83 crore in the FY13 fiscal, a growth of 30% in rupee terms and 15% in dollar terms.