Oil refineries, aluminium, iron & steel to bear brunt of ` fall

While the sharp rupee fall has helped IT, pharma, textiles, two-wheeler segments, the five most vulnerable sectors are refineries, iron and steel, fertilisers, aluminium and power, rating agency Care said on Tuesday.

The rupee has moved down from Rs 63.61 against the dollar on June 1 to Rs 66.61 on August 24 which is a fall of 4.6 <g data-gr-id="22">per cent</g> in less than three months, and a loss of 3.9 <g data-gr-id="23">per cent</g> since end July.

The daily annualised volatility was 5.1 <g data-gr-id="20">per cent</g> since June with this level going up in August to 6.7 <g data-gr-id="21">per cent</g>, the agency said. 

The hardening of the dollar is expected to hit importers very hard as they face the challenge of paying more rupees for dollars which will affect their expenditure and hence profitability, the agency noted. "Importers do face the challenge of paying more rupees for 

dollars which will affect their profitability. 

However, the net impact is more important as several companies/sectors could be having a natural hedge in the form of exports. But others would not be having the same thus leading to 

additional vulnerability, Care said.

A prudent way to tackle this situation is to hedge these positions, it said, adding with the forward premium rates being in the region of 7-7.10 per cent for various tenures, corporates may like to eschew such hedging unless the expectation is that the rupee will fall by a greater level.

However, the rupee depreciation is good from the point of view of <g data-gr-id="24">exports</g> as there are gains to be made in terms of rupee earnings, besides the price advantage to be had in the market, 

it said. The rupee has been buffeted by global developments and while the external fundamentals appear to be strong with forex reserves building up to $355 billion, the rupee nonetheless will be guided by external factors.