Currency Hedging

Since all our business comes in from outside India, InfoBeans is very much affected by the foreign exchange fluctuations. However it is not our business to be in this business, but we are still very much in this business whether we like the business or not.

So I posed a question to my linkedin.com friends about what should a software company do to make sure that it is sort of immune to currency fluctuations. Well, when I say immune, I mean at least take care of uncertainty in the Forex markets. Here are some of the answers to this question.

I believe many of these answers have valid points. My takeaway from this and experience of running this business is that we need to create certainty in our cash flow and therefore make sure that we are more aware of exactly how much cash is coming in to our entity that makes the most cash outflow. It is probably not about profiting from this market. I think we can rarely make a huge Forex conversion profit during the course of a financial year as the fluctuations are very high and predictability is extremely low in this economic environment.

My advice – hedge carefully and hedge only to create certainty, not to generate a profit. This is not your core business and leave it to the experts.