Forexserve delhi
But a semblance of volatility seems to be delhi to the rupee in a warning that such complacency may be imprudent. On Monday, the rupee lost 0. On Friday, the currency completed its biggest weekly drop in six weeks on concern that an improving US economy will spur the Federal Reserve to raise interest rates sooner than planned, reducing the allure of emerging market assets. On Tuesday, before the US Federal Reserve was to start a two-day policy meeting, the rupee gained 0. At the same forexserve, one-month implied volatility in the rupee, a gauge of expected moves in the exchange rate used to price options, rose seven basis points, delhi 0. While exact data for hedging-related activities is unavailable, currency consultants and company executives say hedging of foreign currency exposures has been steadily dropping. Click here for enlarge Hedging helps companies with foreign currency exposure to protect themselves from unfavourable fluctuations in exchange rates. An importer hedging his foreign currency payment obligations would typically execute a contract to buy dollars on a future date at an agreed rate by paying a certain premium to the spot rate. In the case of an exporter, the contract entered into would include an agreement to sell dollars at a future date at an agreed rate. Hedging is typically done by buying or selling currency forwards and options. The central bank has been intervening in currency markets to forexserve the rupee after it depreciated to a record low of At the same time, companies have also turned complacent because most expect RBI to continue intervening to keep the currency stable. A stable currency reduces the risk of unforeseen losses. However, the hedge ratio may have fallen substantially in the past few months. Currency consultants confirm this trend. Lodha said that most Indian companies delhi assuming that the rupee will not weaken beyond So far this year, the rupee has moved in a narrow band between Last year, it moved in a much wider range of Forexserve a stable rupee environment, and strong fundamentals, most of them have drawn a linear projection of an appreciating rupee. There was no need to hedge in the past few months so they have started thinking why pay the forward premia? Ironically, the anecdotal evidence of reduced hedging comes at a time when RBI has been pushing banks to ensure that their corporate clients hedge foreign currency risk, which, in extreme situations, can turn into a financial stability risk. If foreign currency obligations, particularly for importers, are left unhedged, sharp swings in the currency can lead to an increase in payment obligations. This, in turn, can lead to a spike in the demand for foreign exchange and an increased outflow of foreign currency. Recognizing this risk, RBI has tried to at least insulate banks by asking them to provision against unhedged exposures of their clients. However, the efforts have not yielded much as banks have found it tough to calculate the quantum delhi such exposures and report them to the central bank. An email sent to RBI, asking for specifics on unhedged exposure of companies, was unanswered till the time of going to press. Bankers, on their part, say that while smaller firms listen to banks and hedge adequately, a few big companies prefer to keep a large part of their exposures unhedged, since they feel they can absorb any losses that arise out of currency fluctuations. For instance, most steel companies rely on this natural hedge since they export a part of their output and earn in dollars. The exports are expected to increase substantially with ramping up of production. Thus, with exports revenue, there exists the natural hedge against the foreign forexserve obligations. Sharmagroup chief executive officer steel and power at the Abul Khair Group of Bangladesh. According to currency consultants, while companies are citing the forexserve stability in the rupee as one reason for cutting back on hedging, such stability cannot be taken for granted especially at a time when markets are anticipating an increase in interest rates in the US. Some volatility in currency markets is already being seen in response to the dollar, which has strengthened nearly 5. While the rupee has held steady in July and August, it has slipped 0. They will most definitely liquidate their holdings here. Home Companies Industry Politics Money Opinion Lounge Multimedia Science Education Sports More Technology Consumer Specials Mint on Sunday. 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