Nasscom's concern about the currency fluctuation

Business

oi-Monika

By Monika Nihalani

Published: Saturday, September 24, 2011, 15:11 [IST]

Nasscom, the software lobbying body has stated that the currency movement is a serious concern and the same hinders planning process for the Indian software exporters.

Ameet Nivsarkar, Nasscom Vice President (Global Trade Development) was quoted said to PTI, that now the currency is depreciating which is positive for the IT company but earlier it was appreciating. 'This volatility makes it difficult to plan and this is a concern from an industry point of view.'

The Indian national rupee fell by 34 paise and touched its 28-month low, at Rs 49.82 per US dollar in early trade on the Interbank Foreign Exchange.

With the Indian IT and ITES companies earning 85% revenue from export of software services to US and European markets, the volatility of dollar marks a huge importance.

Depreciating rupee against the dollar is believed to have a positive impact on the revenues of Indian software exporters as it would mean that exporters get more rupees per US dollar.

However, experts also say that since most of the companies have hedging plans in place to protect their income, the current fall is not going to have significant impact.

Software firms like TCS, Infosys and Wipro, which get most of their businesses from exports to the US, hedge against currency fluctuations for qaurters in advance.

With hedging, they fix the dollar to rupee conversion. Although in an appreciating scenario it ensures that the company does not have to take a hit on its margin but in an environment where rupee is depreciating, the company is not able to make any additional gains either.

GoodReturns.in
(with Inputs from PTI)