Indian corporates, especially those in the information technology sector, were trying to offset the impact of a declining dollar by invoicing their receivables in currencies that had appreciated against the rupee, a survey on foreign exchange developments by the Federation of Indian Chambers of Commerce and Industry said.
As many as 67 per cent of the respondents covered by the survey had invoiced their receivables in the euro instead of the dollar, Ficci said in a release issued in New Delhi on Tuesday.
Most of the companies that have adopted this practice are from the infotech industry as their export earnings make up a sizeable portion of their total revenues.
"In the case of old economy companies, the net effect will be diluted as the reduced earnings in the form of lower export realisation will be compensated by a reduction in the cost of imports," the Ficci release said.
The Ficci survey was carried out among 100 companies representing various sectors like pharmaceuticals, FMCG, infotech, textiles, engineering and energy.
The weakening of the dollar and the strengthening of the euro and the British pound had made Europe the most lucrative market to trade with, the survey said.
While 41 per cent of the respondents said they would like to enter the European market in the wake of the recent exchange rate developments, 62 per cent felt that there would be a shift in exports to the euro zone because of it.
The rupee had lost 27 per cent, 10 per cent and 9 per cent against the euro, the yen and the British pound respectively, within the last one year and the market expected the rupee to fall further against these currencies, the Ficci release said.
It added that 77 per cent of the respondents were of the opinion that the rupee would further depreciate against the euro.
In view of the increasing dollar inflows into the country, a strong current account position, higher remittances in the form of invisibles and a 3-4 per cent interest rate differential between the US and the Indian markets coupled with the prolonged recession in the US, the rupee vis-à-vis the dollar was likely to continue on its upward trend, the Ficci release said.
The sentiment was reflected in the survey findings as 70 per cent of the respondents felt that the rupee would further appreciate in the next one year.
Overall, the Indian corporate sector had been adversely impacted by the appreciation of the rupee against the dollar, the release said.
A whopping 72 per cent of the respondents said their turnover had been negatively impacted by the recent exchange rate developments.
While 59 per cent said their profits had been negatively affected, 49 per cent believed that the recent developments had negatively impacted their competitiveness in the international market.
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