A perishable goods exporter needed to hedge USD 0.5 million inwards anticipated in July but was unable to hedge as forward limits were not available to him. Although his monthly exposure was USD 500k, bank was charging 20 paise bank margin and was indifferent to any negotiations for a reduction in the margin. The USDINR spot was close to its highest levels since late August 2020(around 75 in April 2021), he didn’t want to miss the opportunity.
We advised the client to open a trading account with the exchange and sell 500 lots of dollars (1lot= 1000 dollars) in futures market to enable him to capitalize this opportunity.
We recommended him that as and when he expects the inward he can square off the same amounts of lots in the futures market.
The client was able to hedge his forex exposure by paying 20 rupees per lot of brokerage in the futures market.
By hedging on the exchange, client was able to save substantially on transaction charges and capitalize on a weaker rupee.
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.