As India grapples with a falling rupee, some companies are likely to be hit much harder than others. Nandini Lakshman reports from Mumbai
For some time now, the falling rupee has been making life miserable for corporate India. On 21 August, a week after India celebrated its 67th Independence Day, the rupee fell to a record low of ₹64.11 to the US dollar, a 16% decline since May. Two years ago it was ₹45.35 to the dollar. Other Asian currencies have also followed the rupee’s slide on speculation that the US Federal Reserve would scale back stimulus.
Experts attribute the pummelling that the Indian rupee has been receiving to a host of reasons. They include the widening of the current account deficit, high inflation, slackening growth, rising external commercial borrowings (ECBs) and increasing imports of fertilizers, coal, crude oil and gold. The pandemonium caused by the falling rupee is nowhere close to abating.
“The rapid depreciation of the rupee put us in a vicious spiral,” said D Subbarao, the governor of the Reserve Bank of India (RBI), speaking to the media in late July.