A Delhi based metal importer had import payments of 3-4 million dollars scheduled every month. The client was getting extremely worried about the weakening rupee. The rupee has already depreciated 7.5% in 1.5 months. With growing uncertainties in the market due to COVID-19, he wanted to be sure of not incurring any more losses.
In this way, the client was protected from adverse currency movement- an increase in the USD/INR rate (The monthly change in the pair is more than 60 paise) and had an upside potential- if rupee appreciated.
The maximum loss he would have had to bear was of the premium paid - INR2.4 million (0.697*3,500,000). But looking at the uncertain circumstances, it was not a big cost for the protection he got. Thus, the importer was hedged from rupee depreciation by gaining protection from the downside.
By following the advice of Myforexeye team the client was able to protect his exposure from the prevailing market uncertainty while keeping his upside potential open.
08 Apr 2021 05:50 PM
A Bengaluru based exporter, banking with a leading private bank, had an inward of USD 79,586.
27 Mar 2021 06:38 PM
A Delhi based exporter with a monthly exposure of USD 100,000 was managing their forex exposure by booking window forward contract with their bank.
19 Mar 2021 05:30 PM
Exporter Saves INR 17,370 On A Single Transaction
05 Mar 2021 03:06 PM
Myforexeye met an exporter when the USDINR spot was at ?72.40.The forward premium for April was 70 paise.
25 Feb 2021 06:10 PM
Our existing client, a garment exporter had hedged his receivables and sold EURINR forward @85.60 for Dec 2020 but part of their order got cancelled. They were able to cancel the balance contract only on maturity @89.90, booking a loss of INR 4.3 per
19 Feb 2021 12:12 PM
A Maharashtra based agro products exporter was taking working capital loan in foreign currency at 4% (LIBOR+200 to 250 bps). He wasn’t aware of PCINR/RPC, a packing credit loan available to Indian exporters.