The rupee's slide to record lows is squeezing mid-sized companies that borrowed offshore when times were good, with a slowing economy now making it even harder for them to generate the extra funds needed to cover dollar payments.
Many firms in capital-intensive industries such as infrastructure, manufacturing and metals that borrowed in offshore markets lack an overseas income stream to buffer their currency exposure, and the impact is expected to become clear in the current reporting season.
The rupee is down nearly 10 per cent against the dollar since the start of May, hitting a record low of 61.21 per dollar on July 8. It has lost more than half its value since early 2008, when it had strengthened past 40 per dollar to decade highs.
That has substantially increased not only the rupee value of outstanding dollar debt, but also the amount of rupees companies need to generate to meet regular interest payments.