Rupee Weakening Against the Dollar: Who Wins & Who Loses?

There are Indian companies that benefit when the Indian Rupee weakens against the US Dollar.

While this may seem counterintuitive at first glance, here's a quick summary of who takes the hit versus who benefits:

Winners: Export-Oriented Firms + MNCs:

These companies benefit from higher conversion rates or increased competitiveness in global markets due to cost-effective production in INR.

IT companies (Infosys, TCS), pharma leaders (Sun Pharma, Cipla), and automotive/textile exporters (Tata Motors, Arvind Textiles) are the primary winners.

MNCs like Amazon and Google also benefit from cheaper labor costs in India.

Losers: Import-Oriented Firms

Companies that rely on imports are negatively impacted by a weaker rupee.

This includes oil & gas conglomerates (Reliance, Indian Oil), consumer goods companies that import packaging and chemicals (HUL, Dabur), airlines that are dependent on fuel costs (Air India, IndiGo), and retailers like Reliance Digital, all of which face higher import costs.

The impact on Indian consumers is clear as this phenomenon increases inflationary pressure, has increased price for imported goods and pinches the pocket due to higher fuel prices.

Is the gradual depreciation of INR by design?

By allowing the Rupee to depreciate, the Indian government may be attempting to reduce the trade deficit by boosting exports and making imports more expensive, which could help balance the current account.

Follow Pranjal Shukla and read more such insights at www.shuklapranjal.in

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