Indian firms turn to cross-currency swaps

Indian companies are increasingly utilising cross-currency swaps to convert a portion of their rupee-denominated debt into dollars, aiming to capitalise on declining US interest rates and reduce borrowing costs.

Following the Federal Reserve’s significant 50 basis point rate cut on Wednesday, and with projections for a total reduction of 200 basis points over the next 15 months, Indian conglomerates and other businesses are exploring cross-currency swaps as a cost-effective strategy.

These financial instruments allow companies to exchange loan principal, interest repayments, or both, from one currency to another, helping to manage interest rate and foreign exchange risks.

Attribution: Reuters

Subediting: M. S. Salama