A Survey of Currency Hedging Practices by Indian IT Firms

In the light of globalization and internationalization of world markets, foreign exchange risk has become one of the most difficult and persistent problems with which financial executives must cope. This risk cannot be avoided, but can be managed by hedging instruments. The need and approach for managing it depends on the size of exposure and fluctuations in exchange rate. Indian IT sector is known for development of software and it mainly depends on exports. They are required to measure and manage exchange rate risk. The survey study on currency hedging practice on Indian IT firms is virtually non-existent. Hence, an attempt is made in this paper to fill this gap, by documenting the currency hedging practice by IT firms of India.