This refers to the editorial, “Taking cover” (October 15).The issue of unhedged exposure of corporates and others comes up every now and then without arriving at any tangible solution.
The RBI has been flagging this for years now, but corporates, particularly those having exports, gamble on this as they perhaps prefer to keep the forex exposure unhedged to take advantage of the rupee depreciation. Further, the accounting system in vogue does not insist on the need to make transparent the unhedged exposure and the attendant risks.
The major reason for many to avoid hedging may be due to lack of expert knowledge and guidance. As rightly suggested, the Government in consultation with SEBI and the RBI has to take concrete measures to take care of this and make it transparent in the published balance sheet. Banks also need to develop the required expertise to guide their customers in the matter.
TV Gopalakrishnan
(This letter appeared in Business Line dated 16/10/14),
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