02163nam a22001097a 4500008004100000100006200041245009500103260005500198300003200253520171300285773005501998260424b           ||||| |||| 00| 0 eng d  aGoel, Rohit  SenGupta, Swapnanil and  Das, Udaibir Saran   aCorporate foreign exchange risk in India: Firm-level evidence and some policy implications  aMargin: The Journal of Applied Economic Research    a19(2), Nov, 2025: p.131-186  aAs India’s economy becomes more integrated with global capital markets, the foreign exchange (FX) exposure of non-financial corporations deserves closer scrutiny. This article presents the first firm-level empirical study of foreign-currency borrowing by Indian non-financial corporations, using a matched panel of 38,589 firms from 2009 to 2023. Using local projections, we estimate how changes in balance-sheet fundamentals—leverage, export intensity, profitability, asset returns and the interest coverage ratio—translate into different forms of foreign borrowing. We find that when leverage increases and export intensity rises, firms raise foreign-currency borrowing, whereas weakening profitability is associated with lower foreign borrowing; responses vary by instrument and by firm type. State-owned enterprises (SOEs) and small and medium-sized enterprises (SMEs) appear particularly vulnerable, often increasing FX exposure when fundamentals deteriorate. India ranks mid-table on corporate dollarisation but near the bottom on hedge ratios. A stress test that simulates a 20 per cent rupee depreciation shows that 12 per cent of firms have an interest coverage ratio below one, revealing hidden vulnerabilities. The findings suggest the need for granular FX exposure disclosure, calibrated hedge norms and differentiated prudential oversight. As India pursues its 2,047 growth ambitions, effective FX risk management is a core pillar of macroeconomic and financial stability.-Reproduced 


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