From a low of 49.05 against the dollar in May 21, 2002, the rupee has now breached the 46 levels convincingly.

The global weakness of the dollar and India's strong balance of payments fundamentals are among the reasons that led to the appreciation of the rupee. While the rupee is appreciating considerably, China's currency is having a stable run against the dollar.

Not all are amused though. Particularly exporters, as the rupee's recovery hit their profit margins. The consistent rise of the rupee prompted many of them to consider the euro as a favourable option. In August, the Federation of Indian Export Organisations said the euro accounts for at least 30 per cent of the trading volumes in the domestic foreign exchange markets, or about $300 million per day -- a significant improvement when compared with earlier periods.

Commerce and Industry Minister Arun Jaitley recently admitted that the hardening of the rupee vis-à-vis the dollar was a cause for concern for export growth.

IT companies were also in the forefront to make their point against the rising rupee. IT major Infosys said that even a one percent appreciation in the rupee against the dollar could have an impact on its bottom-line to the extent of 40 to 50 basis points.

Text: Adur Pradeep

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