Indian companies hedged well to withstand Dollar rise

Despite the rupee's recent depreciation against the dollar, Indian companies have demonstrated resilience through effective hedging strategies. Many firms have adapted their approach, utilizing forward contracts, options, and currency swaps to mitigate exchange rate risks. While the cost of hedging has increased, with three-month offshore forward points near two-year highs, companies like Sterlite Grid have opted for domestic funding to avoid expensive offshore borrowing. The IT sector has particularly benefited, with the rupee's weakness potentially boosting margins by 30-50 basis points. However, experts caution that long-term hedges may be less attractive in the current low-premium environment.

Source: Business Standard, Economic Times, Moneycontrol