Corporate India employs rating agencies to assess impact of rupee fall

With the Rupee sliding to record low of 80 against the US Dollar, companies have enlisted rating agencies to calculate pressure points from exposure to currency tilts. Acuite Ratings & Research, CARE, ICRA and India Ratings are evaluating various possibilities for corporate.

Among factors being considered include intervention measures from the Reserve Bank of India (RBI), and benchmarking of likely future USD-INR levels (e.g. Rupee at 82, 83, etc.) against companies' financial abilities.

The RBI began making apparent moves once Rupee reached 80 against the USD. It is selling dollars through select banks to stem the slump. Latest data showed that India's forex reserves dropped to $590.3 billion — a 15-month low, in July.

K Ravichandran, chief rating officer at ICRA Ratings told the paper that they are "evaluating different pressure points for clients, in respect of the rupee's record lows". He added that they have set different levels of stress tests which would reveal either the companies' ability to withstand headwinds or pass on higher input costs to consumers.

Abhishek Bhattacharya, senior director at India Ratings said they would continuously monitor the RBI's moves and are running "scenario analysis for stress testing credits with meaningful offshore liabilities or significant dependence on imports".

Suman Chowdhury, chief analytical officer at Acuite said they are identifying "relatively vulnerable issuers who are net importers or have significant foreign currency debt obligations". They will assess if the rupee slump would impact these companies' profits and balance sheets in FY23.