Today the Reserve Bank of India placed on its website a Working Paper* titled “India’s External Commercial Borrowings: Determinants and Optimal Hedge Ratio”. The Paper is authored by Ranjeev. This paper examines the determinants of External Commercial Borrowings (ECBs) raised by firms in India and identifies an optimal hedge ratio for the ECBs portfolio. It finds that depreciation of the Indian rupee has an adverse impact on the issuance of ECBs in the short as well as long run. The optimal hedge ratio for the ECBs portfolio is estimated at 63 per cent for the periods of high volatility in the forex market. (Yogesh Dayal) Chief General Manager Press Release: 2021-2022/1583 | |