First Hedging, Now Rupee Invoicing

For quite some time we all know that the Indian Rupee had been appreciating against the US Dollar. Most of the IT companies are billing their clients in US Dollars.

Rupee appreciation against dollar chart

Because of this sudden appreciation of the Rupee against the US Dollar their profit margins are affected. No need to say investors aren't quite happy to see their EPS (Earnings per share) go down.

So companies first decided to hedge their earnings to avoid further losses due to an appreciating rupee. Since the Rupee would just stop appreciating, now these IT companies are now thinking of invoicing their long term client and business partners in INR (Indian Rupees). It is also noted that big companies will have the teeth and muscle with clients to push throught this, though small and medium companies will still find it hard to make this change.

Another interesting thing to note here is that, some companies having clients in the EURO region are billing them in stable European currencies (say the swiss franc). It should be interesting fact to see how far the Indian Rupee is accepted in the international market.

The rumour in bangalore is that some IT companies are planning for an 6day work week to increase productivity to offset the loss because of Rupee appreciation.

Meanwhile, Rupee Invoicing seems to be the norm now!!!

1 Reviews:

Anonymous said...

yep very much true