WNS Global increases forex hedging horizon

[dhilipkumar]

WNS Global increases forex hedging horizon

MUMBAI: WNS Global Services, the Nasdaq listed second biggest BPO firm in India, has been looking at ways to tackle the fluctuations in global currencies. The company mainly deals in the US dollar, British pound, and other local currencies in countries where it has offices.

A few months ago, the company changed its hedging policy given high volatility in forex market. "We are maintaining a hedging horizon of 24 months, which means every month we assess our forex position for next 24 months. We increased this period from earlier 18 months due to increased currency fluctuations," said company CFO Alok Misra. "This works just like systematic investment plans. Today's hedges were taken 9 to 24 months before," he adds.

The company uses both forward and options routes in equal proportions to hedge its receivables. At any time, the hedging position covers over 90% of its receivables. Currently, its hedging cover stands at over $500 million. Of this, dollar-rupee and pound-rupee hedges contribute 40% each while the remainder consists of dollar-pound hedges.

The current weak trend in the rupee is proving beneficial to WNS, which reports its revenue in the US dollars. While the company realizes most of its revenue in dollars, majority of its expenses are in rupees. Hence, a weaker rupee brings down relative expenses.

During the December '08 quarter, the company took a hit of over $10 million in revenue due to currency fluctuations. However, its bottomline saw an addition of $1 million.