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.
23 Jul 2021 01:45 PM
A Maharashtra based exporter had an inward of USD 9,198 and the bank was quoting him a net rate of 73.08 when USDINR spot rate was at 74.34.
13 Jul 2021 01:26 PM
A Pune based construction company did not have the funds to keep with bank as a collateral and open a forward limit to hedge the forex exposure.
03 Jul 2021 03:27 PM
An Ahmedabad based textile importer had an import forward booked for 22nd July at 74.59. On 2nd July, the client had to make an urgent payment of USD 49920.
27 Jun 2021 09:27 PM
A Japanese Yen importer had a business arrangement with the seller to use RBI quarterly reference rate for import bill buying. The client was hedging the import bills (JPYINR) on the basis of previous quarter's reference rates published by RBI to hed
18 Jun 2021 03:49 PM
A client had an exposure of USD 1 million receivable in seven equal tranches of USD 0.142 million each between August to February. He receives documents only one month before his receivables are due.
11 Jun 2021 01:37 PM
A U.P. based exporter had an inward of USD 150,000 in May 2021 to be converted to Indian Rupees. Forward premium were at its 4.5 years high in May so cash spot discount was also high around 5-6 paise.