In fact, about a decade ago, several arguments were put forward in favour of issuing foreign currency sovereign debt when the government’s intention to take recourse to sovereign borrowings in the international markets was formally announced by the Hon’ble Finance Minister.
Several academics argued in favour of the proposal since they felt that it may be more economical for the government to raise funds abroad. However, such borrowings may entail foreign currency exposure and hence the foreign currency risk, which was not built into the analysis of benefits.