What impact can a falling rupee have on businesses in India
Discuss the effects of the depreciating value of the rupee on companies, despite high travel demand.
- Increased cost of imports: A falling rupee makes imports more expensive for Indian businesses, leading to higher operational costs.
- Unstable input prices: Companies reliant on imported raw materials may face fluctuating input costs due to the depreciating rupee,
- Impact on profit margins: Decreased value of rupee can squeeze profit margins for businesses that rely heavily on imports or have foreign currency debts.
- Competitive disadvantage: Companies that import goods may struggle to compete with domestic producers due to increased costs caused by a weakening rupee.
- Foreign exchange losses: Businesses with foreign currency holdings may incur losses when converting their earnings back into rupees due to adverse exchange rates.
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3 months ago