U.P. based exporter having monthly exposure of $ 4-5 lakh exports is banking with a private bank. They had entered into a few trade positions in GBP and Euro. Incurred a loss of around 10 lakhs in 2 of those trade positions and a negative MTM (marked to market) of around 15 lakhs in the rest 6 positions.
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The management wants to recover the current loss they are incurring and wanted our advice on this trade loss. We advised them that will monitor these positions on a regular basis and advise them about when to unwind these positions. The nearest maturity in these positions was of 240 days at the time of taking control of these positions and the MTM loss was at 15 lakh. To recover the loss they had booked in the 2 trade positons we planned and advised them to take one Euro position. Our objective was to recover the MTM loss in the trading positons, in around 2 Month’s time we managed to bring the loss position in profit of around INR 1.5 lakh and our Euro position contributed 3 lakh of profit to them. We suggested them to unwind all the positions with a 3.2 lakh profit in Euro and a loss of 1.7 lakh in GBP(Net 1.5lakh gain).