The rupee touched a near eight-year high on Wednesday, breaching the Rs 43 to a dollar mark to touch Rs 42.84. However, in the open market, because of the purchases from refiners and importers, rupee recovered to close at Rs 43.04 a dollar as against the previous close of Rs 43.06 on Tuesday. But RBI pegged its reference rate at Rs 42.90 on Wednesday.
Since July 19, 2006, rupee has appreciated by 8.75% and in 2006-07 it appreciated by around 4%. This will simply reduce the profitability of exporting companies by that many percentage points. The appreciation in the Rupee will affect profitability of exporters, IT companies, and business process outsourcing firms.
At the same time it will help companies that are importing, since they can source products from abroad by paying less. Oil refining companies, which import crude petroleum products from abroad, are the biggest beneficiaries.
Read more in The Times of India article.
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