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More foreign exchange disclosures needed: RBI

India's central bank chief asked companies to make more disclosures on their exposure to foreign exchange and derivative products as the rupee fell, stirring up concerns it may be in for a sharp drop.

"While the banks' risk exposures and their risk-management strategy is usually an item of public disclosure, there is a corresponding need for corporates too to make adequate disclosures regarding their risk exposures, specially to derivatives and foreign exchange," Yaga Venugopal Reddy told a banking seminar.

"This would enable the banker to assess the risk profile of the corporate accurately and to evaluate the appropriateness of various financial products on offer."

His comments came on a day when the rupee fell to a new 10-month low. India's trade deficit is widening as imports outpace exports in a fast-growing economy, leading analysts to believe it has even further to fall.

To fund expansion, Indian companies have in recent years made a bee-line to raise foreign currency loans to take advantage of low interest rates globally. This has increased their foreign exchange liabilities, and the RBI has in the past told them to hedge exposures so they do not create a systemic problem.

( www.financialexpress.com)


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