The euro tumbled against the dollar, falling 3.6 cents after the strong US jobs data released recently. With the euro at 1.06 to the dollar, the market is bracing for the currency reaching parity with the dollar that would mean a further fall. Businesses in India are feeling the effects of the euro’s troubles. Individual textile exporters in Tirupur, who have sizeable exposure to the currency, have been hit hard after the recent drop in currency’s exchange rates.

Concerns about the euro zone economy are not new, but the currency’s sudden plunge in December 2014 and now has caught textile merchants unawares. The euro that was trading at around Rs 85 last year slipped slowly to around Rs 75 levels by early December. This shake-up was quite sudden, though there were signals that there may be trouble brewing.

There was reluctance to hedge euro exposure, especially after the short rally in mid-December when the exchange rate went close to Rs 80. But the currency nose-dived in a month to a low of Rs 68 in late January 2015. This is a 20 per cent drop from the levels seen last year. However, the suddenness of the currency’s movement and the subsequent losses suffered are creating more awareness on currency hedging.