Value-added exporters urge RMB, INR swaps
Value- added exporters have met with Sri Lankan authorities to advocate a Chinese Renminbi and an Indian rupee swap for raw material imports.
Certain industry stalwarts met with Finance Ministry officials to discuss this two weeks ago, officials said. “They promised to look into the Chinese swap,” an industry official told the Business Times.
He said the forex crisis is escalating and becoming increasingly challenging to plan ahead in their respective businesses. “We lose credibility to our suppliers when we don't deliver the goods on time owing to sourcing raw materials. When we try to finally import raw material the banks waitlist us,” he pointed out.
A second exporter said that all the finance facilities are in local rupees and the exporters at times lose out on the exchange rate which is managed artificially at Rs. 203 when the grey market rate is at Rs. 260. “If this crisis isn't resolved by September many of us are going to be in more trouble than now,” he said.
“This is the lowest exchange rate and depending on the day it will go up to Rs. 300,” a moneychanger told the Business Times.
A third exporter said that as a way out the Chinese and Indian swaps for raw materials by exporters, would help.
A target of more than US$1 billion export proceeds per month for the rest of the year is set, according to the 6-month road map set by the Central Bank ( CB) last October. This ambitious target is all the more reason for the state authorities to start helping the exporters, the third exporters pointed out.
Inflation is a concern, analysts say noting that macro conditions are becoming worse with exporters struggling with payments. “Irrespective of the bank rate or informal rate, there is no access to funds,” the second exporter said. Eventually, it has had an impact on all exporters and it affects supplies and the policy consistency itself are an issue, he added.
A managing director of a condiment export business pointed out that businesses cannot plan for the next year in such an economic situation. “We can't plan our day-to-day banking transactions for example. How can we forecast for the next year?”