A strong outlook for the rupee has led corporate India to run up unhedged foreign exchange exposures to the tune of almost $3 billion in the last one year and this has become a cause of concern for the central bank.
The central bank, in its mid-term review of monetary and credit policy, pointed out that despite expressing concern over unhedged foreign currency borrowings by corporates in the mid-term reviews in 2001 and 2002, and reiterating this in the annual policy statement of April 2003, hedging had not yet been ensured.
