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Falling UK Currency Pound - Major Pain for Indian IT Firms


The moment UK referendum tilted towards the exit option, the UK currency sterling pound started getting pounded due to uncertain course. UK voted in favor of exit from European Union and pressing commission to complete the formalities at the earliest whereas European Commission is no mood to give any relaxation in processes.

As per the economic and political analyst, the disruption is going to have bad impact on UK economy and GDP is bound to go down whereas financial segment is also fearing the move of financial hub from London to another location based out of European Union member countries.

The continuous fall of pounds are worrisome point for Indian IT companies as they do huge business in Europe. UK currency fell near to $1.23 a pound which is around 30% from pre exit level.

The continuous fall of UK currency trapped Indian IT companies and I am sure they must have taken the measure and must have done currency hedging but the fall is steeper than expected. I am sure that once Indian IT companies will come out with quarterly result, their margin, EBITA and profitability will come at the lower end of expectation and in many case companies will miss the street expectation

In above scenario, we may see huge selling pressure in IT stocks which can be buying opportunity for long term investors

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About Devendra Prasad

20 years plus industry veteran of domestic and international ICT domain with the expertise in Business, Technology, Strategy and Analysis. Specializes in forecasting impact analysis, trends and recommendations for Investments, Technology and Regulations.
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