In the currency market, the rupee has weakened to the level of 96.28 against the dollar. According to Reuters report, the rupee has fallen by about 1 percent last week. This is the biggest weekly fall since May when it had hit an all-time low of 96.96. According to Reuters report, people doing business in the market are constantly keeping an eye on the price of crude oil and the steps taken by the Reserve Bank. The effect of all this ups and downs will be that the fall of the rupee will have a direct impact on the earnings of some big companies of the country, in which the profits of some will increase while some will have to bear huge expenses.
Due to weakening of rupee, big technology companies of the country get direct benefit. A large part of the earnings of companies like Infosys, Tata Consultancy Services, HCL Technologies and Wipro come from abroad in dollars. When the dollar is strong and the rupee is weak, the same dollar coming from outside gets converted into more rupees when exchanged in India. This increases the total revenue and profit of these companies. Information is available in the annual reports and investors’ meetings of these companies that due to the strengthening of the dollar, these IT companies get huge economic benefits.
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Earnings of pharma companies will increase
A weak rupee also proves to be very beneficial for the pharma sector. Big companies like Sun Pharmaceuticals, Dr. Reddy’s Laboratories, Cipla and Lupine sell their medicines in the US and other countries. The money these companies receive from selling medicines abroad is in dollars. When the rupee falls, the same US dollars come to India and give more value to the rupee, which increases their overall earnings. The reports of the companies clearly say that the fluctuations in the rupee have a direct impact on the income earned from selling medicines abroad.
Costs will increase on oil companies
Crude oil is imported from abroad and is paid for in dollars. According to the quarterly financial reports of Indian Oil Corporation, Bharat Petroleum Corporation Limited and Hindustan Petroleum Corporation Limited, the cost of importing oil increases significantly when the rupee weakens. It is clear from the official details of these companies that when the dollar becomes expensive, they have to pay more money to buy crude oil, which puts huge financial pressure on their operations.
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Difficulties for airlines will increase
Airlines have to pay in dollars to rent their planes and buy fuel. According to IndiGo’s quarterly financial report, when the rupee weakens, the dollar becomes expensive, which increases the daily expenses of the airline. Due to the expensive dollar, it becomes very difficult to run their business.
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