Summary
The Rupee's Next High
We present the best case, worst case and likely scenarios on the rupee-dollar front.See the full content of this document
Extract
Business News
Rishi Joshi
The shoe was pinching for a while but now it has begun to hurt. Exports of textiles, gems and jewellery, tea, spices, leather and marine products have been particularly hit by the rise in the rupee's value from Rs 44.28 to the dollar to Rs 40.84 over a period of just 10 weeks. Says R.K. Dhawan, Chairman (Northern Region), Federation of Indian Export Organisations (FIEO), the apex body of Indian exporters: "This is a matter of concern for exporters." Result: the government's export target of $160 billion (Rs 6,56,000 crore) in 2007-08 will be difficult to meet.IT companies, for whom the us is the biggest market, will also be hit, albeit on a lesser scale. The sector, which reported stellar results in 2006-07, had projected a firm demand outlook going forward, based on a rupee-dollar exchange rate of Rs 43. However, the impact of the higher rupee on earnings will be limited in the immediate future as most companies have hedged their earnings. Says Sujan Hajra, Analyst, Anand Rathi Securities: "The impact will depend on the onsite-offsite revenue mix of individual companies." it giants like Infosys, Satyam, TCS and Wipro will suffer as 40-50 per cent of their revenues come from offsite projects.For RBI, though, a rising rupee is a tool for combating inflation- -an appreciating rupee means cheaper imports of oil and foodgrains, and, therefore, cheaper retail prices of these, and other, commodities. So what does it mean for the rupee-dollar exchange rate...See the full content of this document
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