Consider the following statements about overseas borrowings When there is interest rate disparity be...........

Explanation:

Overseas Borrowings

• The argument behind borrowing in foreign currencies is that when there is interest-rate disparity between the domestic and foreign markets (favouring the latter), it becomes cheaper to service such loans.
• It is crucial to note the borrower is still open to exchange risk, notwithstanding the difference in interest to be paid.
• If the domestic currency were to decline compared with the foreign currency, the company is liable to pay more than it had bargained for in real terms.
• A revenue earned in foreign currencies may not be a sufficient hedge for companies borrowing excessively due to low-interest rates.
• The problem with borrowing in the current environment is the impending risk of a recession due to increased interest rates to curb inflation. 

Hence only statement 2nd is correct.