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

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza