Corporate India’s Debt Under Pressure As Rupee Falls

ndia’s corporate sector, which sits on a huge pile of foreign currency debt, is under threat as the rupee’s downward spiral exacerbates the debt burden of companies already battling feeble growth and sluggish demand.

The rupee has declined 17 percent against the dollar this year, falling to record lows in recent weeks as investors shun emerging assets on fears of the U.S. winding down its monetary stimulus, which could turn off hot money flows.
“Indian companies have huge debt, not just in India but offshore as well. In the first part of the year, 40 percent of all incremental debt taken out by Indian companies was offshore in U.S. dollars…I suspect that quite a lot of that was unhedged,” Andrew Holland, CEO, Ambit Investment Advisors told CNBC.

via CNBC

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.