A large importer based in Pune. We had just started a relationship and the client was getting extremely worried about persistent rupee weakness. Their import payments of USD 7,00,00 each were due for September and October 2018.
Myforexeye Value Addition :
The client approached us in a state of panic rightly so because rupee fell from 68.50 in start of August to 71.50 levels in September and continued to depreciate. In first week of September, when USD/INR levels were around 71.70, we suggested the client to do Vanilla options for their payments in September and October. We made the client buy a USD/INR call option at a strike price of 72.00 for end of September, paying an option premium of 40 paise and another USD/INR call option at a strike price of 72.50 for end of October, paying an option premium of 55 paise.
On the maturity of the option bought for September, spot reference was 72.70 and the client exercised the option with a strike price of of 72.00 thereby gaining 70 paise. After adjusting the option premium, the client gained 30 paise on USD 7,00,000 accounting to a profit of INR 2,10,000. On the maturity of the option bought for October, spot reference was 73.35 and the client exercised this option as well with a strike price of 72.50 thereby gaining 85 paise. After adjusting the option premium, the client in this case also gained 30 paise on USD 7,00,000 accounting to a profit of another 2,10,000 rupees.
This way the client gained a total of INR 4,20,000 by following our suggestion as we were able to analyse the market correctly.
13 Jun 2020 03:43 PM
A Tiruppur based fabric exporter had booked forwards expiring on May 29th, 2020 but due to lack of inward remittances, he had to roll over the forward contracts. The challenge encountered by him was the uncertainty in the Rupee spot price and the sev
05 Jun 2020 10:57 AM
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
19 May 2020 12:06 PM
A cloth exporter based out of Tirupur booked around $100,000 of export forwards per month. The client’s bank margin was fixed at 10 paise. The bank had been quoting a cash spot rate of 10 paise above the margin. The client had recently signed our “FX
16 Nov 2019 04:30 PM
Delhi based manufacturers of institutional and home furnishings, fabrics and hospital textiles exporter with market base across the country and other Asian and European nations. The client had recently started using our TPO service and had to book a
05 Oct 2019 05:30 PM
A Pune based industrial Instruments importer engaged in manufacturing of Electrical/ Instrumentation Systems. The client regularly avails import funding in foreign currency from Overseas branches of Indian Origin Banks. The client shared a transactio
21 Sep 2019 06:14 PM
A New Delhi based electronic goods importer. The working capital cycle of the client is 180 days but the Import payments terms are at sight against DP documents. The client used to utilize the Cash Credit facility with a PSU Bank. The client had appl