You will be aware that one of the Maharatna companies declared a 18% drop in Q-1 profit and a loss in excess of Rs 250 crore reportedly ascribed to foreign currency debt.2 10. How do the corporates manage this risk? There are basically two routes available: non-hedging techniques and hedging techniques.
Non-hedging techniques include: a)  Settlement of transaction through advance payment, which though beneficial for an exporter, carries a cost for the importer and is impossible for a borrower. Even for the exporter, it is doubtful, in how many cases in our context an exporter can demand and obtain advance payment without the risk of losing the order.