The Indian rupee’s ongoing slide against major currencies is beginning to leave a mark on corporate India’s financial statements, raising fears of a return to the forex stresses last seen in 2008. While experts emphasise that the situation has not yet escalated into a full-blown crisis, the depreciation of the rupee is quietly building pressure across corporate balance sheets.
A steady fall in the rupee means that overseas loans and foreign-currency borrowings are costing Indian companies more in local currency terms when they are translated back into rupees. This phenomenon is already eroding profit margins for firms with substantial exposure to dollar, euro and yen debt. Even companies with extensive hedging strategies are reporting sizeable currency-related hits, underscoring the limits of protection when exchange movements are prolonged.
For instance, Power Finance Corporation (PFC) — despite covering around **95% of its forex exposure through hedges — reported nearly ₹940 crore in unrealised forex losses during the first half of the 2025–26 fiscal year. Similar pressures have surfaced at other corporates, suggesting that weakening currency effects are percolating beyond just a handful of large borrowers.
Analysts are watching this trend closely. The current scenario does not mirror the systemic currency stress of 2008 or the balance-of-payments shock of 2013, but it does raise red flags about corporate earnings and foreign-debt vulnerability if the rupee continues its decline. Risk is particularly acute for firms with unhedged foreign borrowings or those with limited natural hedges through export-linked revenues.
Meanwhile, broader currency markets show the rupee weakening to historic lows against the U.S. dollar, reflecting sustained forex pressures for India. This depreciation comes amid global volatility, trade policy headwinds and capital outflows, adding to the complexity faced by Indian corporates and policymakers alike.
In summary, as the rupee weakens further, forex translation losses are increasingly impacting corporate profitability. Although it’s not yet a crisis, the conditions are reminiscent of earlier forex stress episodes and warrant close monitoring by companies and investors.
Leave A Comment