look news india
Mumbai: Due to the strengthening of the dollar against the rupee, there is a fear that the financial burden on Indian companies raising funds in the form of dollars from abroad will increase. However, it is estimated that 70 percent of companies raising funds through the ECB are hedging their dollar-denominated debt.
Companies that have not hedged against the rupee’s decline are likely to suffer higher losses. The rupee has declined by more than four percent against the dollar in 2024 and the decline is continuing in the current year.
An analyst said the rupee’s devaluation would force companies to spend more rupees to buy dollars, putting pressure on their balance sheets.
Companies that are overly dependent on external commercial borrowings (ECBs) for their funding needs will have far-reaching consequences.
As the cost of the dollar increases, companies will be forced to change their financial strategies.
According to Reserve Bank data, Indian companies filed an estimated USD 49.20 billion for the ECB in FY 2023-24, almost double that in FY 2022-23. In the financial year 2022-23, this figure was 26.60 billion dollars.
At the time of this registration, the rupee was stronger against the dollar than it is now.