The rupee’s sharp volatility against the U.S. dollar in recent months is expected to dent the earnings of some sectors by up to 250 basis points (bps) in fiscal 2026, CRISIL Intelligence said in a study.
These include imported/dollar-denominated sectors such as complex fertilizers, airlines, oil and gas (refining and marketing), polyvinyl chloride (PVC) pipes and fittings, capital goods, pharmaceuticals (active pharmaceutical ingredients, or APIs) and renewable power.
However, the overall impact on the credit profiles of companies is seen neutral, it said.
The rupee depreciated from ₹83.81 to the dollar on October 1, 2024, to ₹87.40 on February 28, 2025, before appreciating to ₹85.65 on April 3, 2025. This is against an annual rupee depreciation of 1-2% seen over the preceding two years through September 2024.
While there has been some appreciation of late, CRISIL Intelligence expects the rupee to continue to depreciate against the dollar and settle at ₹88 a US Dollar by end fiscal 2026.
“The extent of the impact will depend on the exposure to foreign trade, ability to pass on the cost increase and hedging practices. There might also be player-specific impact across sectors based on the extent of unhedged foreign currency debt exposure,” it said.
“The company-specific impact will also depend on the proportion of outstanding debt exposure in dollars and hedging practices adopted, as the rupee depreciation would inflate liabilities and lead to higher debt obligations and/or mark to market losses which could impact the credit profile if the amounts involved are significant,” it added.
Published – April 08, 2025 09:36 pm IST
