By K R Sudhaman NEW DELHI, AUG 27 : Government Friday ruled out any mechanism of fixed exchange rate for exporters to hedge against sharp currency fluctuation that is eroding their competitiveness. "It would not be possible for providing a mechanism of fixed exchange rate for exporters," Minister of State for Finance Namo Narain Meena told law makers in the Lower House of Parliament in a written reply. The current foreign exchange regime is based on market determined exchange rate mechanism where intervention by RBI is limited to managing excessive volatility and ensuring orderly conditions in the forex market, he said. There was also no fixed or predetermined band for the exchange rate, Meena told Lok Sabha. For exporters, the central bank has ensured that there were sufficient hedging tools available to them both over-the-counter and exchange traded, he said. The hedging tools available to mitigate their currency risk exposures are in the form of forwards, options, swaps and exchange traded currency futures and currency options, he said. RBI, in consultation with the government, is following a policy of active capital account management and a calibrated liberalisation on the capital account, he said. The current framework for foreign institutional investment in India is an integral part of the policy, he said, adding within the policy stance, stipulating a minimum lock-in period for FII investment in India is not envisaged. He said the Federation of Indian Export Organisation (FIEO) had stated that the sharp fluctuation in the exchange rate had put exporters in a fix and they were losing both competitiveness as well as profit due to appreciating rupee. To avoid such fluctuations, FIEO had suggested a minimum lock-in period of two years for foreign institutional investments, he said. FIEO has also suggested that an exporter opting for a fixed rate for a year may be credited at Rs 47.50 per US dollar, irrespective of the market value of the greenback, he said. He said FIEO argument for fixed exchange rate was that it would provide stability on the exchange rate front to the exporters. Filed by Rajesh Menon