Declining dollar could hurt exports sector

The continued drop in value of the major currencies has started to bite with exporters saying it is eating into their profits. 

The continued drop in value of the major currencies has started to bite with exporters saying it is eating into their profits. 

The US dollar, euro and the UK pound have been declining for the past one or so months now, mainly occasioned by the Eurozone crisis. 

 

The exporters say a weak dollar, for example, affects their costing when buying raw materials or selling the finished goods.

 

Janet Nkubana, the Rwanda Exporters Association chairperson, said the fluctuations were among the factors that hurt exporters profits, especially where there is no provision for price hedging.

 

“What is happening is that after buying raw materials and costing the product at a particular dollar rate and it drops, they end up with minimal profits,” Nkubana said in an interview. Foreign exchange fluctuations make many an exporter susceptible to making losses, she added.

According to Dickson Musoni, the Bank of Kigali treasury manager, the franc is projected to continue appreciating this financial quarter, mainly due to more donor funds to be received by the government.

Rwanda earned about Rwf301.5b from exports last year compared to Rwf244.3b in 2011.

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