While the rupee fell from 35.70 to the 42.50 level, exports fell by 7.94 per cent in the first quarter (April-June) of the current year. ``Exporters were demanding even devaluation of the rupee to push up exports. They were not happy with the daily depreciation of the rupee in the last one year. Now what has happened? Exports are showing a negative growth for the first time in several years,'' said a former official of the Reserve Bank of India.

Maybe the only consolation is that in rupee terms, exports will go up. In fact, exports have gone up by 4.85 per cent in rupee terms. In dollar terms the export earning remains more or less same. ``The theory that exports will pick up after the currency devaluation remains only on paper. Only exporters benefited while converting dollars into rupees. There is no rise in foreign exchange inflow,'' the former RBI official said.

When the rupee was ruling in the range of 38 level against the dollar last year, the president of one industry association had told The Indian Express that the appropriate value of the rupee would be 42. Now the same president is saying that the right value of the rupee is 45. Once the rupee falls to this level, the chamber will have to revise its new value.

``The government and the RBI also seem to have finally understood that the country needs a multi-pronged strategy to push up exports rather than banking on the rupee depreciation. The package of measures (like reduction in export credit from 11 per cent to 9 per cent and hike in tax holiday for EOUs and EPZs to 10 years) recently was part of a strategy to boost exports,'' said a member of Federation of Indian Export Organisations (FIEO).

In fact, many of the foreign investment firms and banks were also pitching for further depreciation of the rupee. ``Without currency depreciation we believe that export growth is likely to be far lower than the 20 per cent target stated in the (Exim) policy,'' said a note prepared by Merrill Lynch. The study conducted by Standard Chartered Bank has also forecast further depreciation of the rupee.

According to one exporter, even when India tried to make inroads into major markets, these efforts were stifled in the name of dumping and other protectionist measures. ``Now with WTO norms taking shape, one will find more foreign goods flooding the Indian market,'' he said.

Moreover, the benefits that Indian exporters got from the rupee depreciation was neutralised by the even steeper fall in other South-east Asian currencies like the Thailand baht, Indonesian rupiah, Malaysian ringitt and South Korean won. As these currencies depreciated by 40-90 per cent, goods from these regions became cheaper than Indian goods. Adding to the woes, the entire world trade has slowed down with many economies like Japan and Hong Kong taking a hit.

Exporters have indeed made more profits from the rupee depreciation in EEFC (export earners foreign currency) accounts rather than higher volumes or margins. International Monetary Fund (IMF) has warned, ``A crisis in one country may lead creditors to reevaluate the fundamentals of other countries, even if these have not objectively changed, or may lead creditors to reduce the riskiness of their portfolios and flee to quality.'' When the South-east Asian currencies fell recently, foreign investors reviewed their portfolios. When the rupee declined steeply against the dollar, they again reviewed their exposure to India.