Bangalore, July 27:

India’s IT industry, the flag bearer of a resurgent economy, wants the government to step in and check the rupee’s unprecedented rise to nine-year highs in an effort to protect their earnings.

The rupee has gained almost 10 per cent this year and 14 per cent over the past 12 months against the dollar, denting the earnings of an industry that gets two-thirds of its 50 billion dollars in annual revenue from the US.

“It’s not a market driven by market forces alone,” said Kiran Karnik, president of the National Association of Software and Services Companies (NASSCOM), in an interview here. “These are not normal times.” “There’s no point in the government pretending that this is a perfect market,” Karnik said. “That’s an unreasonable attitude to adopt; there’s scope for (the government) doing things” to stem the rupee’s rise.

Indian entities have raised almost 12 billion dollars abroad in recent months which they have brought home and converted into rupees, betting the currency will extend its gains and in the process driving it up further, Karnik said.

“Earlier, you wouldn’t raise money if you didn’t really need it,” he said.

“Now you are able to raise money abroad, so you are doing it, and converting it into rupees.

You convert the money back into dollars three months later. “That is creating tremendous pressure,” Karnik said, adding, “Any dollar inflows of of this magnitude are going to depress the dollar.”

He said NASSCOM, which represents the information-technology industry that has led Indian economic growth in the past two decades, has sought intervention by the government, which is sitting on record foreign exchange reserves of about $200 billion.

The rupee rose to a new nine-year high this week when it peaked at 40.28 per dollar,

helped by sustained capital inflows into an economy that has expanded nine per cent for each of the past three years.

Net investment by overseas investors in the Indian stock market alone exceeded $10 billion from January to July, compared with eight billion dollars for all of last year.

The Reserve Bank of India has adopted a hands-off approach to the foreign exchange market

because the rupee’s rise makes imports, especially of such key commodities as edible and crude oil, less expensive, helping combat inflation in a price-sensitive economy.

For software firms whose expenses are almost all in the local currency, the appreciation reduces the rupee equivalent of every dollar they earn overseas.

Infosys Technologies, India’s second-biggest software maker, has cut its annual profit and sales forecasts, citing the rupee’s strength, after missing its own earnings projections in its first quarter.

Its smaller rival Wipro posted first-quarter profit 7.1 billion rupees ($175 million) in the three months ended June, missing analyst expectations in excess of 7.5 billion rupees.