Hedging against Indian Rupee depreciation

This article has been sourced from MCX-SX. You can visit their website http://www.mcx-sx.com/ for futher information.
  • Language
  • App
  • Subscriptions
  • Specials
  • Sign-In
  • Register
GeStepAhead GrowMyMoney SME Special
moneycontrol.com

Home » News » Markets » Rupee

Jan 12, 2011, 04.09 PM | Source: Moneycontrol.com

Hedging against Indian Rupee depreciation

This article has been sourced from MCX-SX. You can visit their website http://www.mcx-sx.com/ for futher information.

Like this story, share it with millions of investors on M3

Hedging against Indian Rupee depreciation

This article has been sourced from MCX-SX. You can visit their website http://www.mcx-sx.com/ for futher information.

Post Your Comments

Share Cancel

Hedging against Indian Rupee depreciation
This article has been sourced from MCX-SX. You can visit their website http://www.mcx-sx.com/ for futher information.

Hedging against Indian Rupee depreciation
 
An organic chemicals dealer in India placed an import order worth, say, 100,000 with a German manufacturer. The current spot rate of Euro is, say, Rs.64.05 and at this rate the value of the order is Rs.6,405,000. The importer is worried about sharp depreciation of Indian Rupee against Euro in coming months when the payment is due and brought 100 Euro futures contract (1000 each) on MCX-SX, say, at Rs.64 a Euro. Suppose, at expiry date, Rupee depreciated to Rs.65 the importer would have to pay Rs.6,500,000, but he would gain Rs.100,000 (i.e. Rs.65 - 64 * 100 * 1000) from the futures market and the resultant outflow would be only Rs.6,400,000.

In the short term, firms can make gains or losses from hedging. But the basic purpose of hedging is to protect against excessive losses and to benefit from knowing exactly how much it was going to pay for the import order to avoid the uncertainty associated with future exchange rate movements. 

Ads by Google

Buy, Hold, Sell ? Hear it first on M3
Hedging against Indian Rupee depreciation

See all

Get started using your favorite social network

or

Login using moneycontrol ID

Username
Password

Need help logging in? Reset password.

Don´t have an account? Sign Up

Get started using your favorite social network

or

Simply sign up using this short form

* mandatory

UserName*

Username should be atleast 4 character

Password*

Password should be 8 or more characters,
atleast 1 number, 1 symbol & 1 upper case letter

Alert

Your Password should contain
  • 8 or more characters
  • At least 1 number
  • At least 1 symbol
  • At least 1 upper case letter
Confirm Password*
Email
Already have an account? Login