Companies with hedges can endure 10% more fall in rupee

MUMBAI: Sliding rupee is credit negative for many companies with overseas borrowings, but many of them are covered by natural hedges and can withstand another 10per cent fall, said Moody’s Investor Services.

“Most rated Indian corporates have protections such as natural hedges, US dollar revenue and financial hedges in place to limit the damage of a further potential 10per cent weakening of the rupees, said Annalisa DiChiara, a Moody’s vicepresident and senior officer.

Indian Rupee has fallen 13 per cent against the US dollar this year making it the worst performer in Asia as foreigners pull out funds and India’s current account deficit, the excess of imports over exports, surges. The rupee fell on Monday to a historic low of Rs 72.67 per dollar.


“The impact of the rupee’s weakening will be diverse and depend on issues such as a corporate’s reliance on exports, its cost base, and its exposure to pricing on international markets,” added DiChiara.