Rupee weakness good news for IT firms but uncertainty on long-term impact

The recent depreciation of the rupee against the dollar is proving to be a tailwind for the Indian IT sector, which generates 50-60% of its revenues from the US market.

“For every 1% depreciation in the rupee, there is typically a 0.5% increase in revenue and about a 1.5% rise in profit. This quarter, the currency depreciation is expected to offset furlough impacts, leading to better performance,” said Pareekh Jain, CEO, Pareekh Consulting and EIIRTrend.