sharekhan on rupee

Our estimates at Rs40/USD
In our estimates we have factored in an exchange rate of
Rs40/USD for FY2008 and FY2009. This not only gives us a
reasonable margin of safety but can also potentially result
in an upside to our estimates, considering the central
bank's renewed focus on supporting the rupee.
In case the rupee stays close to the current level of Rs40.5-
40.6 for the rest of the year, it would result in an earnings
upgrade of 1-1.6% for FY2008 and of 1.1-1.7% for FY2009
for select front-line companies. However, if the central
bank intervenes aggressively in the foreign exchange
market and the rupee depreciates to an average rate of
Rs41/USD, the earnings upgrade would be much higher at
2.5-3.2% for FY2008 and 2.2-3.7% for FY2009 for the same
companies.