Indian accounting rules shield corporates from forex losses
Despite sharp falls in the value of the rupee and large dollar-denominated loan exposures, Indian corporates are not feeling the effect on their balance sheets
The rapid depreciation of the rupee versus the dollar has caused huge mark-to-market losses on foreign currency denominated loans taken out by Indian corporates but domestic accounting rules mean these will not be fully realised until 2020.
The prospect of a premature end to quantitative easing by US policy-makers has driven emerging market currencies down as international capital flows out of these countries. The rupee has been hit hard by this process, falling 10% since the start of May, and
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