Borrow abroad at zero interest rates and hedge yourself...

Article;
RBI's monetary-policy 5 key-takeways from Raghuram Rajan's review.

Comment;

If the RBI does not reduce interest rates investors in INDIA should borrow abroad where interest-rates are record low, near zero... To hedge themselves against the currency movements the can use currency derivatives... Debt in your currency lowers the risk of default, but i think there is a difference, it is private debt... No private company can print money like government... But, they can get bail-outs... But, again we can hedge ourselves by derivatives... If we look at the real interest rate (money interest rate minus inflation), for Indian investor it will be again negative... Because, the borrower is Indian and he has to spend money here, in INDIA, where inflation is high... Higher inflation means low real interest rates... Remember "the comparative advantage theory" where says the investor/producer should use that factor which is cheap... Capital is cheap in the developed world... We can use the ultra-low interest rate in the region to increase supply in INDIA... Low interest rate means low capital-labor ratio... Good for investment... Interest rates in the US are much below the Indian rates... Real interest rate will go down more than INDIA...