Left Menu
Development News Edition

Moody's says continuous fall of rupee bad for Indian economy

IANS | Updated: 10-09-2018 16:54 IST | Created: 10-09-2018 16:40 IST
Moody's says continuous fall of rupee bad for Indian economy
The 24 corporates rated by Moody's include those in the IT, oil and gas, chemicals, automobiles, commodities, steel, and real estate sectors.

The ongoing free fall of the rupee against the US dollar is credit negative for Indian companies, especially for those that generate revenue in rupees but rely on dollar debt to fund their operations and have substantial dollar-based expenses, Moody's Investors Service said on Monday.

The American credit rating agency's report on the weakening rupee was published on the day the Indian currency touched a new low of 72.67 on Monday, depreciating by almost a rupee from its previous close of 71.73 per US dollar. The rupee has depreciated 13 percent so far this year against the dollar.

"A sustained "weakening of the rupee would be credit negative for its rated Indian companies, particularly those that generate revenue in rupees but rely on the US dollar debt to fund their operations and have significant dollar-based costs, including capital expenses," Moody's said."

However, of the 24 Moody's-rated India-based corporates across the high-yield and investment-grade categories, 12 generate most of their revenue in US dollars or have contracts priced in the greenback, providing a natural hedge, and thus limiting the effect a weakening in the rupee could have on their cash flows, it said.

"Nevertheless, most rated India-based corporates have protections in place, including natural hedges, some US dollar revenues and financial hedges, to limit the negative credit implications of a potential further 10 percent weakening of the rupee to the US dollar from Thursday's (September 6) rate," Moody's Vice President Annalisa D'Chiara said in the report.

"Furthermore, the impact of the rupee's weakening will be diverse and will also depend on issues such as a particular corporation's reliance on exports, its cost base, and its exposure to pricing on international markets," she added.

The 24 corporates rated by Moody's include those in the IT, oil and gas, chemicals, automobiles, commodities, steel, and real estate sectors.

According to the US agency, weaker credit metrics under a scenario of a further 10 percent drop in the value of the rupee, from the rate on September 6, can be accommodated in the companies' current rating levels.

"Furthermore, refinancing risk associated with the companies' US dollar debt maturing over the next 12 months is manageable," it said.

The Moody's report follows its annual survey of the US dollar debt exposures of South and Southeast Asian high-yield companies, published in June 2018, which considered the effects of the rupee weakening to around Rs 78 to the US dollar.



Uganda COVID-19 response: Was off to a good start but reopening dwindled prospects

Uganda has shown success in using health information to enhance efficiency of disease surveillance, reporting and monitoring. The success, however, has critical challenges confronting it as the country resumes normal activities....

New farm bills in India: Focusing on farms or farmers?

... ...

Kenya’s COVID-19 response: Chaos amid lack of information

Confusing numbers and scanty information on how effective curfews and lockdowns have been in breaking transmission have amplified coordination and planning challenges in Kenyas response to COVID-19. Without accurate data, it is impossible t...

Farkhad Akhmedov: Calculating the price of impunity from the law

In insistences such as the battle over the Luna, Akhmedov has resorted to extreme legal machinations to subvert the High Courts decision and keep his assets from being seized. ...


Latest News

Thirumavalavan's comments on women irrelevant in today's perspective, says Khushbu Sundar

Bharatiya Janata Party BJP leader Khushbu Sundar on Wednesday said that Viduthalai Chiruthaigal Katchi VCK leader Thol Thirumavalavans alleged remarks about women and the Manusmriti would not be accepted as it was irrelevant and nobody read...

Bharti Airtel shares jump nearly 13 pc as company logs highest-ever quarterly revenues

Shares of Bharti Airtel jumped nearly 13 per cent on Wednesday after the company reported its highest-ever quarterly consolidated revenue on the back of a rise in data usage and higher realisations. The stock gained 12.65 per cent to Rs 487...

'We need you': GOP hunts for new voters in Trump territory

President Donald Trumps campaign has a bold theory for how he will win reelection It can tap a universe of millions of supporters who did not vote for him in 2016 but will do so this time. Supposedly, these voters are overlooked by polls th...

1st International Symposium on Crime Studies for New Criminal Justice Protocols during a global pandemic

Sonepat 28 October 2020 The COVID-19 pandemic has impacted crime phenomenon disproportionately while property crimes are low, human and wildlife trafficking, illegal markets, online frauds, economic crimes are on a rise. Jindal Institute o...

Give Feedback