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rupee against dollar RRS feed

  • Question

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    as we all know dat the value of rupee is increasing............can u suggest me how it will make an effect on indian IT industries
    Wednesday, September 26, 2007 10:58 PM

Answers

  • Tata Consultancy Services VP Speaks RUPEE VS DOLLAR



    2. Over the last 5 years, the US dollar has lost more than 30% of its value against the Euro. Since the rupee was pegged to the US dollar much like the Chinese yuan, Indian outsourcing firms benefited from this positive currency exchange trend. The Indian rupee has recently gained strength against the US dollar rising from an exchange rate of 44.61 rupees per dollar to 40.59 rupees per dollar over the last six months. Do you think the rupee is likely to continue gaining strength against the dollar?

    The rupee's appreciation vis-à-vis the dollar is definitely of concern to the industry and TCS. To what extent the government will succeed in the short term in addressing inflation will determine how the rupee's rise will play out.

    In the past two months, we had a 7% increase in the value of the rupee against the dollar. But even with that challenge, TCS has been able to maintain strong margins because of the value that we provide. About 40% of our business comes from fixed-priced bids, so as we continually improve our business processes and leverage our own intellectual property as part of the solution, our margins can get better.

    3. If yes (to question 2), how will this impact earnings? Have you hedged your currency risk through futures or other financial instruments?

    We’ve hedged fairly well in the last quarter. But because of the mechanism and costs involved, we can only go to a certain point. So anything below 43 rupees vs. the dollar will continue to worry us.

    TCS has taken currency hedges worth about $1 billion, up 30% from an earlier level of $750 million from a year ago. Also, our revenues are already partly hedged as our costs are also in dollars in many contracts -- so it's not that this appreciation hits your full turnover.


    Thursday, September 27, 2007 1:07 AM

All replies


  • Rupee on Wednesday touched nearly 9-1/2 year peak at 39.63 against the US dollar, soon after opening of trade, buoyed by heavy portfolio investments into the record breaking equity markets.

    Later, it was quoted slightly better at 39.70/71 a dollar from overnight close of 39.7350/7450 in late morning deals.

    In active trade at the Interbank Foreign Exchange (Forex) market, the local currency opened strong at 39.68/70 a dollar.

    Firming local stock markets and weak dollar overseas pushed rupee upwards to near 9-1/2 year high at 39.63 a dollar. It breached previous peak of 39.65 registered on April 14, 1998 and is currently moving towards 39.4090 per dollar recorded on April 8, 1998.

    In morning deals, the benchmark Sensex was up by 125.53 points to cross 17K-mark for the first time in the history.

    However, dollar buying by oil refiners and other importers for their month-end requirements later pulled rupee back to a low of 39.73 before being quoted at 39.70/71 a dollar in late morning trade.

    According to forex dealers there was some intervention by the central bank to prevent the sustained surge in the rupee value to protect the exporters' competitiveness.

    The dollar fell back to record low against the euro in New York on Tuesday night.

    Meanwhile, Foreign Institutional Investors (FIIs) picked up shares nearly worth USD 2 billion since September 19 and their total investments in equity markets crossed USD 11 billion this year so far, surpassing previous record investments of USD 10.79 billion in the year 2005.




    Thursday, September 27, 2007 1:01 AM

  • You might like if the dollar goes below 40, thinking our economy is stronger.
    But India has foreign reserves of around $130 Billion, which deppreciate in value.
    Also IT salaries get diminished, as conversion into rupees is less.
    Exports are the worst hit, as the exporters make no spread ie make very less profit due to decreasing value of dollar.

    Another - - US is spending so much in Iraq, and the loss incurred by countries like India etc, are in a way, compensating for this deficit.




    Thursday, September 27, 2007 1:06 AM
  • Tata Consultancy Services VP Speaks RUPEE VS DOLLAR



    2. Over the last 5 years, the US dollar has lost more than 30% of its value against the Euro. Since the rupee was pegged to the US dollar much like the Chinese yuan, Indian outsourcing firms benefited from this positive currency exchange trend. The Indian rupee has recently gained strength against the US dollar rising from an exchange rate of 44.61 rupees per dollar to 40.59 rupees per dollar over the last six months. Do you think the rupee is likely to continue gaining strength against the dollar?

    The rupee's appreciation vis-à-vis the dollar is definitely of concern to the industry and TCS. To what extent the government will succeed in the short term in addressing inflation will determine how the rupee's rise will play out.

    In the past two months, we had a 7% increase in the value of the rupee against the dollar. But even with that challenge, TCS has been able to maintain strong margins because of the value that we provide. About 40% of our business comes from fixed-priced bids, so as we continually improve our business processes and leverage our own intellectual property as part of the solution, our margins can get better.

    3. If yes (to question 2), how will this impact earnings? Have you hedged your currency risk through futures or other financial instruments?

    We’ve hedged fairly well in the last quarter. But because of the mechanism and costs involved, we can only go to a certain point. So anything below 43 rupees vs. the dollar will continue to worry us.

    TCS has taken currency hedges worth about $1 billion, up 30% from an earlier level of $750 million from a year ago. Also, our revenues are already partly hedged as our costs are also in dollars in many contracts -- so it's not that this appreciation hits your full turnover.


    Thursday, September 27, 2007 1:07 AM
  • tats really a good que...anand, u hav done a good job... thanks for ur valuable info anand!

     

    Thursday, September 27, 2007 2:49 PM
  • thank u for providing such useful informations...keep going...
    Thursday, September 27, 2007 3:43 PM
  • Check and compare the bank exchange rates of dollar to rupee at http://d2r.madhukar4e.com
    Monday, July 27, 2009 10:00 PM