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There are certain countries which our site is not relevant for, due to language , payment and other considerations.

Will it damage our SE ranking to block these countries?

Currently we get 30-40% non-relevant traffic and we pay unnecessary fees for that.

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AFAIK It will not harm you if you set the preferred Geo Location in Webmaster Tools and please mention the method you used to do that – Bala May 26 '14 at 12:10
Maybe backtrack why you get that much traffic, and fix it. Could be spambots or brutefoce attacks on your server. Those are easily blocked with a firewall (server level, not htaccess or something) – Martijn May 26 '14 at 12:50

No, you should not. If you block the unrelevant countries it should even help you to rank better in SE, because your relevant users will be a bigger part of all users and this will improve your site's behavioral factors.

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