Rupee’s continued rise intimidates IT pivotals
Satyam Computers, Infosys and Wipro had lost 0.6 - 1.5%, following a rise in the rupee to a fresh nine-year high. Satyam Computer lost 1.5% to Rs 463.50, Infosys shed nearly 1% to Rs 2052 and Wipro lost 0.6% to Rs 563.90.
The rupee rose to a fresh nine-year high against the dollar on Monday, as the market tested how far the central bank would let it appreciate before intervening. By 9:14 IST, the partially convertible rupee was at 40.5450 per dollar, its highest level since May 1998, and gaining from Friday's close of 40.8450/8600.
The rupee’s surge is a cause of concern for IT firms, as it directly impacts their revenue and profits, a lion’s share of which is accounted for by exports. IT companies use the tool of hedging to mitigate risks associated with currency movements. TCS is said to have obtained a $1 billion hedge at a price range of Rs 43.50 - Rs 44. Infosys has a forex cover of $ 470 million. Satyam Computer has hedged a position of $ 460 million with a policy to hedge at least 50% position. Wipro has forward hedge contracts (options & futures) of $195 million at an exchange rate between Rs 44 – Rs 45.77.
The rupee’s rise comes just when investors had turned optimistic on IT stocks after Infosys’ strong FY 2008 guidance in dollar terms, putting to rest concerns of the impact of a slowdown in the US on India's IT sector.Meanwhile, the influential US non-farm payrolls data showed the world's biggest economy posted its slimmest gain in jobs in more than two years for April 2007.
The rupee rose to a fresh nine-year high against the dollar on Monday, as the market tested how far the central bank would let it appreciate before intervening. By 9:14 IST, the partially convertible rupee was at 40.5450 per dollar, its highest level since May 1998, and gaining from Friday's close of 40.8450/8600.
The rupee’s surge is a cause of concern for IT firms, as it directly impacts their revenue and profits, a lion’s share of which is accounted for by exports. IT companies use the tool of hedging to mitigate risks associated with currency movements. TCS is said to have obtained a $1 billion hedge at a price range of Rs 43.50 - Rs 44. Infosys has a forex cover of $ 470 million. Satyam Computer has hedged a position of $ 460 million with a policy to hedge at least 50% position. Wipro has forward hedge contracts (options & futures) of $195 million at an exchange rate between Rs 44 – Rs 45.77.
The rupee’s rise comes just when investors had turned optimistic on IT stocks after Infosys’ strong FY 2008 guidance in dollar terms, putting to rest concerns of the impact of a slowdown in the US on India's IT sector.Meanwhile, the influential US non-farm payrolls data showed the world's biggest economy posted its slimmest gain in jobs in more than two years for April 2007.
Labels: Rupee rises
posted by SY at 1:14 PM
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