New Delhi: The Indian rupee is fast falling against the US dollar.
It has depreciated 2.7 per cent since April 1 – on the back of strong FII outflows, higher dollar demand from oil companies and the ever widening trade and current account deficits.
However, a falling Indian rupee is expected to benefit Indian exporters, especially the Indian IT companies.
Exporters earn dollar incomes from their clients abroad and a fall in the Indian currency vis a vis the US greenback helps them pocket more rupees against the dollar inflows.
According to IT majors Satyam and Infosys, every per cent drop in the rupee's value is likely to help improve their profit margins by 30 basis points (100 basis points = 1 per cent) and 40-50 bps respectively.
What's more experts believe that the rupee is likely to slide further as higher trade and current account deficits will continue to hurt the rupee.
They believe that receding FII, FDI and NRI inflows – which are essential to plug the demand supply mismatch – coupled with higher demand for the dollar from the Indian oil companies will further exert a downward pressure on the rupee.
On the positive side, Indian IT majors are likely to benefit from a falling rupee.
However, only they will be able to earn more for their unhedged positions.
While Satyam has hedged $250 million on a marked to market basis, for Infosys the amount of their exports receivables are hedged to the tune of $330 million.
Both the IT majors have hedged their exposures at a rate of one US dollar for Rs 44.48 according to the respective companies.
However, for Infosys, the falling rupee will have a negative impact on the other income, said a company official.
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