The current economic scenario has clearly proved the point that disturbances in the global financial markets will certainly impact the Indian economy. This article looks at the factors affecting the appreciation of the Indian rupee. The impact of the rupee appreciation on the exporters and importers, sector-wise and company-wise, has also been examined. The strategies adopted by the firms in the Textiles and Business Process Outsourcing industries to hedge against risk of loss from an appreciating rupee are also examined. It concludes with an advice to the economy to build on its fundamentals so as to mark the Indian rupee's presence in the global currency market.

"India finally sees reality - The rupee appreciation is a cause for concern for exporters and manufacturing firms", says Union Minister of Commerce and Industries Kamal Nath. In actual terms it means that as on October 12, 2007 the rupee was only 39.30 points behind the dollar! While this may be considered as a great achievement, reflecting the strong fundamentals of the Indian economy, some people feel that it is rather too early for India to take credit.

What does appreciation of the rupee mean? It means different things to different people. A decade and more ago the rupee was considered inferior to the dollar. It required Rs. 40 to Rs. 42 to purchase a dollar.There was a time when the rupee was at an all-time low of Rs. 49.06 against the dollar and was expected to further depreciate. This appreciation is certainly welcome by importers of expensive goods like oil and capital equipment, travelers abroad either for purposes of study, holiday, shopping or family visits. But the flip side of the coin is that there is a large section of people who are extremely unhappy with the phenomenon and it is for this section—the exporters— that the government has to address the issue as a matter of serious concern.

Treasury Management Magazine, Indian Rupee, Indian Companies, Indian Economy, Global Currency Market, Global Financial Markets, Business Process Outsourcing Industries, Federation of Indian Export Organizations, FIEO, Gross Domestic Products, GDP, Foreign Institutional Investor, FII, Indian Textiles Industries, Software Technology Parks of India.