MUMBAI: It's boom time in Asia, only Premal Udani, who runs an Indian apparel exporting company, says he has little to show for it. A surging tide of foreign cash has helped drive stocks in Indonesia and the Philippines to record highs, while India's market has been flirting with a lifetime peak, but as Udani – whose company Kaytee Corp. sells to Wal-Mart and Macy's – knows there can be danger in plenty. That rush of money – replicated across emerging Asia as investors seek a haven of high-growth amid miserably low returns in the developed world – has pushed the Indian rupee up 5.5 percent since Sept. 1 to its highest in more than two years. That, plus surging cotton prices, is wiping out his profit margin, which usually hovers under 5 percent. The rupee's rise is the “final nail in the coffin,” said Udani, who also chairs India's Apparel Export Promotion Council. “We are just trying to stay afloat and ride this out.” With currencies in many Asian countries at export-bruising highs, policymakers in the region have started to intervene to keep their exchange rates competitive, especially as China keeps a tight rein on its yuan. Many fear a quiet trade war is brewing, fought not through tariffs but through currency. From April to August, revenues from India's apparel industry, which employs 24 million Indians, slid 11 percent from the same period last year, due to sluggish global demand and a strong rupee, which Udani says is helping neighboring China and Bangladesh win orders. “The steep appreciation of the rupee erodes our competitiveness, especially when in neighboring countries we have currencies which are depressed,” he said. “The government has to intervene.” That's the kind of tit-for-tat language that has people like International Monetary Fund managing director Dominique Strauss-Kahn and Brazilian Finance Minister Guido Mantega warning of a brewing currency war as countries scramble to stem currency appreciation and keep their exports competitive. In the US, record low interest rates have dragged down the dollar. Because China effectively pegs its yuan to the dollar – even after promising more flexibility back in June – a weak greenback hurts China's export competitors across Asia.
