Indian Rupee News: Rupee depreciation: Winners and losers - Rvpg media

Indian Rupee News: Rupee depreciation: Winners and losers

The soaring dollar, accelerating US interest rates, stalling global economy and alarming geopolitics have whipsawed global currencies, sending them to record lows against the greenback. The rupee, albeit one of the better performers, hit a record low of 81.93 to a dollar on Thursday, almost 10% down from a year earlier.

Typically, net exporters, remittance receivers, or those with dollar incomes will gain, while net importers will get hit, when the currency weakens. Those with large foreign loans will see rupee interest costs rise. The equation is more complicated this time though as all currencies have depreciated against the dollar and the rupee may even have gained against some such as the pound. ET looks at the impact on key sectors.

IT companies are the biggest gainers as they bill most clients in dollars. The Americas, including the US, contribute about 50-60% of total revenue.


  • A 100-basis-point fall in the rupee against the dollar translates into a 30-basis-point operating margin benefit for IT cos
  • IT companies on an average could see a 110-basis point operating margin expansion in the current quarter
  • Some of the gains are being offset by other cross-currency headwinds


Rupee depreciation is in general positive as the industry is a net exporter. However, the exact impact will depend on the segment, geography and import dependence for inputs.


  • Drug cos with large formulation exports, especially to the US, stand to gain
  • 1 rupee depreciation vs dollar will add 0.1-0.15% to Ebitda margins
  • Domestic-focused formulation, API players to face cost escalation and margin pressure


With sizeable US exports, the sector is a net gainer. However, given the sharp drop in demand from the US and the EU, business may not be great.


  • Those with good order books will make gains from currency depreciation
  • For every 1% fall in rupee’s value, profit increases by 0.25-0.5%


Big gainer as India usually exports nearly 230 million kg teas, or around 16% of what it produces, to countries such as Russia, Iran, the US, the UK, Germany, Japan, Poland, CIS countries


  • Topline growth is likely to be around 5% more in FY23

** Margins expected to get 2-3% lift from currency depreciation

  • Increases the global competitiveness of Indian tea, spurring more exports

Indian solar plants depend heavily on imported solar cells and modules. Projects may turn unviable due to exchange rate changes between time of bids and finalisation of equipment supply and other contracts.


  • Every Re 1 fall vs dollar exchange leads to 2 paisa/unit increase in tariff
  • Project viability concerns for those under execution; possible delays

The most affected sector as India imports over 85% of oil and half of the gas it consumes. Margins come under pressure if higher costs due to depreciation cannot be passed on.


  • Rupee profit boost for domestic producers (ONGC, Oil India, Vedanta, RIL) as well as fuel exporters (RIL, Nayara)
  • Purchase costs will rise for crude importers (Indian Oil, BPCL, HPCL, RIL, Nayara) as well as gas importers (GAIL, GSPC). Margin pressure if costs cannot be passed on


Vehicle makers largely import components from China, Japan and SE Asia, compensated by the rising export of finished vehicles.

Indian component exporters will also gain. The components industry recorded a trade surplus of $700 million for the first time last FY, with exports increasing 43% to a record $19 billion.


  • Cars, in general, more expensive
  • Margins under pressure, but exports can cushion the impact
  • Exact impact will depend on inputs purchased and level of exports
  • Component exporters will gain; those serving domestic market will face margin pressure


About 60% of inputs for the steel sector are dollar linked. The upside from exports is less now as there’s been a 60% drop from a year earlier because of export duty levied in May, and lower global prices.


  • Impact dependent on cost structure and import needs of producers
  • Those with substantial exports will gain


Key raw materials including crude and palm oil derivatives are imported and account for nearly half of input cost


  • Imported products, especially cosmetics, watches and apparel, could get costlier
  • Exact margin impact will depend on the ability to pass on depreciation costs
  • Premium segment is not price sensitive and may not see pressure from depreciation

Around 40-60% of total input cost, including components, are imported


  • May escape immediate impact as stock for the festival season already in
  • Decline in commodity prices, logistics costs has reduced pressure
  • Further depreciation may impact margins if demand eases


Jet fuel, lease payments, maintenance and overhaul costs, along with aircraft purchases, are typically priced in dollars


  • Increases day-to-day cost of operations, squeezing profit and cash balance
  • Will impact profitability of airlines
  • May make overseas ticket prices more expensive, dent demand, margin

Telcos spend around $6 b annually importing network gear. Impact may be partly offset as telcos also buy in euros and pounds, which have both recently depreciated vs the rupee.


  • Weaker rupee could push up capital expenditure bill by 5% in FY23
  • Rupee fall vs dollar to also increase telcos’ interest payouts on dollar debt
  • Telcos to raise prices by around 8-10% margin pressure if usage drops

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