Uday Kotak Calls for Action as Rupee Breaches 90 Against Dollar
The Indian currency has officially crossed a significant and worrying psychological barrier, trading past the 90 mark against the US Greenback. Amidst this financial turbulence, veteran banker Uday Kotak has issued a strong wake-up call to domestic industries, suggesting that Indian companies need to urgently step out of their "comfort zone."
The Founder and Director of Kotak Mahindra Bank took to social media platform X (formerly Twitter) to highlight a concerning trend. He pointed out that despite consistent buying by domestic investors, it is actually the foreign investors who seem to be dictating the market's direction right now. Kotak noted that aggressive selling by overseas entities has resulted in the Nifty delivering zero returns in dollar terms over the last year.
"Time will tell who is smarter. For now, foreigners seem smarter," Kotak remarked, emphasizing that while this is a long-term game, the current scoreboard favors foreign selling strategies involving both Foreign Portfolio Investors (FPI) and Private Equity.
Currency Hits All-Time Low
At the time of reporting, the Rupee vs Dollar exchange rate stood at Rs 90.26. This marks a fresh all-time low for the Indian currency, which has now depreciated by more than 5 percent cumulatively this year.
The pressure on the rupee is evident in the stock market data as well. On Tuesday alone, Foreign Institutional Investors (FIIs) pulled out a net Rs 3,642 crore. Although Domestic Institutional Investors (DIIs) tried to counter this by buying shares worth Rs 4,646 crore, the market sentiment remained negative. Both the Sensex and Nifty 50 closed in the red for the third straight session.
Why is the Rupee Falling?
Market experts believe the depreciation is not just about selling pressure. Jateen Trivedi from LKP Securities suggests that the lack of a concrete India-US trade deal and repeated delays are making investors nervous. The market is tired of assurances and wants to see actual numbers. Furthermore, the Reserve Bank of India (RBI) has been relatively quiet, with muted intervention to stop the slide. All eyes are now on the upcoming Friday policy announcement to see if the central bank will step in to stabilize the currency.
Winners and Losers
A weaker rupee is a double-edged sword for the economy. Sunny Agrawal of SBI Securities explained that export-heavy sectors are likely to benefit from this trend. Industries such as Textiles, IT, Pharmaceuticals, and Shrimp exports could see better margins.
However, the cost of doing business will rise for import-dependent sectors. Companies dealing in FMCG, Plastic polymers, and Oil and Gas will likely face significant cost pressures as buying raw materials from abroad becomes more expensive.
