Wait...

Online India Export Import Data Search

Complete Training Video : Click Here

Fearing rupee swings, importers rush for dollar cover.


Date: 11-01-2017
Subject: Fearing rupee swings, importers rush for dollar cover
MUMBAI: Importers and overseas currency borrowers are usually reluctant to hedge their US dollar exposure as they try to benefit from exchange rate movement to their advantage but with the US dollar strengthening and a collapse in the forward premium which makes hedging cheaper, there is a surge in covering USD positions. 

The move reinforces the fact that rupee is likely to turn volatile, and some analysts see it reaching Rs 70-72 to the USD. 

“Many importers are now rushing for currency hedges taking advantage of lower costs as they expect the rupee to turn volatile in future,“ said Keta Kurkute, VP, Mecklai Financial, a FX advisory firm. “The currency market has been lacklustre in the past 2-3 weeks but this has not made importers complacent with global and domestic events that will soon trigger ripples in the placid water.“ 

Hedging costs have come off across the board. Importers are mostly covering their positions in 1-3 month contracts, dealers said. In the past two months, the premium has fallen to 4.3% from 6.2% for one-year forward contracts. Even for 1-2 -month contracts, forward premia are trading in between 3.50% and 4.50% in the last three weeks, tempting importers to hedge dollar commitments. 

The dollar-rupee 30-day contract was at 5.87% on December 21, and has now dropped to 4.61%, dealers said. 

Donald Trump, the new US Republican president-elect will assume charge on January 20, a move, which is set to see some policy changes impacting outsourcing business.

Last week, shares of Indian information technology companies plunged after a bill backing key changes to the H-1B programme was reintroduced in the US Congress by two lawmakers who claim it will help crack down on abuse of the work visa.The visa allows skilled workers from countries including India to fill hi-tech jobs in the US. 

“The rupee has been fairly overvalued, which only points to further erosion of the local unit's value to the dollar,“ said Anindya Banerjee, currency analyst, Kotak Securities. Securities. 

“Importers are also wary of this and trying to cover their posi tions at a lower cost. Volatility is expected to rise ahead of US President Trump formally taking charge.“ 

Last October, the dollar-rupee volatility index hit a more than 8 and half-year low in October amid Reserve Bank of India's tight interventions to check the rupee's intraday day volatility. 

The index dropped to as low as 3.50%, the lowest level since January 2008, according to the Bloomberg Implied Volatility Index. It now quotes 5.77% till press time increasing the chances intra-day sharp swings.

Source: economictimes.indiatimes.com

DO YOU NEED HELP?







Get Free Sample Now

Which service(s) are you interested in?
+


What is New?

Date: 17-01-2017
DGFT Notification No. 36/2015-2020
Notification of ITC (HS), 2017 – Schedule-1 (Import Policy)

Date: 17-01-2017
DGFT Notification No. 35/2015-2020
The minimum price for import of Areca Nuts is enhanced from existing Rs. 162/- to Rs.251/- per Kilogram

Date: 16-01-2017
Customs Circular No. 03/2017
Import of point of sale (PoS) terminal devices, its cells & batteries and labelling requirements thereof-reg.

Date: 13-01-2017
Customs Notification No. 04/2017 (NT)
Tariff value Notification in respect of Fixation of tariff Value of Edible Oils, Brass Scrap, Poppy Seeds, Areca Nut, Gold and Sliver

Date: 13-01-2017
Customs Notification No. 01/2017 (N.T./CAA/DRI)
Appointment of Common Adjudicating Authority by DGRI

Date: 13-01-2017
Customs Notification No. 02/2017 (N.T./CAA/DRI)
Appointment of Common Adjudicating Authority by DGRI

Date: 13-01-2017
Customs Notification No. 03/2017 (N.T./CAA/DRI)
Appointment of Common Adjudicating Authority by DGRI

Date: 13-01-2017
DGFT Notification No. 34/2015-2020
Export Policy of Animal By-Products.

Date: 13-01-2017
Customs Circular No. 02/2017
Amendments effective from 15th January, 2017 to the All Industry Rates of Duty Drawback - reg.

Date: 12-01-2017
Customs Notification No. 03/2017 (NT)
Regarding in amendment in Notification no. 131/2016-Customs (N.T.) dated 31.10.2016 relating to AIR of duty drawback



Exim Guru Copyright © 1999-2017 Exim Guru. All Rights Reserved.
The information presented on the site is believed to be accurate. However, InfodriveIndia takes no legal responsibilities for the validity of the information.
Please read our Terms of Use and Privacy Policy before you use this Export Import Data Directory.

EximGuru.com

C/o Infodrive India
E-2, 3rd Floor, Kalkaji Main Road
New Delhi - 110019, India
Phone : 011 - 40703001