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 severe liquidity crunch he was amidst.
The usual approach during a forward rollover is to aim for a higher spot so that the forward rate received is as high as possible so that even if it’s lost now it will be covered at the time of forward utilization. The aftermath in the client’s situation was incurring heavy cash loss on cancellation during times of liquidity crunch. The client would have needed funding to pay for the cash losses incurred by him.
Myforexeye advisors suggested him to target a lower spot and wait until forward maturity date as huge dollar inflows were expected on account of FDI.
Since the client was a TPO customer our dealing desk executed the deal and negotiated the cancellation rate of 75.56 after adding the bank margin.
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.