What impact could currency appreciation, 3% already seen in September, have on export-oriented sectors such as IT?
Rupee appreciation does impact export-oriented sectors negatively but historically, we have seen in the IT sector that the efficient players have been able to cushion such moves by managing other cost levers. This cost management plays out more on a longer-term basis than on a quarterly basis as currency movements can be swift while the balancing cost levers generally take time to implement. 2007-08 was one such difficult year wherein the rupee appreciated by more than 7%. However, at the end of four quarters efficient companies were able to effectively manage this adverse currency movement with minimal Ebitda impact.
