Exim Bank urges exports to hedge against currency risk

KOLKATA: Export Import Bank of India has on Thursday urged exporters to maintain the quality of Indian products and hedge against foreign exchange risk sufficiently, instead of worrying about increasing competition from China as it has devalued yuan to boost sagging exports.

"It is still early to say anything on the impact of yuan devaluation on Indian exports. But there is no need to panic at the moment," Exim Bank Chairman and Managing Director Yaduvendra Mathur said.

He said that India's exports were comparatively steady in the first four months of the fiscal than other countries and India’s fundamentals continued to remain strong.

The rupee came under pressure immediately after China devalued yuan and there were reports that exporters tried to cash in as a depreciating favours them.

“People engaged in currency speculation should be actively discouraged,” Mathur said at a Ficci event in Kolkata. "This is a temporary phase and the rupee is a strong brand and investors should not panic. The fundamentals are strong."

"What I feel is, by devaluing the yuan, China is trying to export away inflation and making an attempt to dent the dominance of the US dollar," he said.

Exim Bank has raised $100 milion in yuan bond, just ahead of the yuan devaluation. It plans to raise about $2 billion through bonds this fiscal with around $700 million fund raising being completed.