Forward premiums in USDINR inching higher: Mecklai

Mecklai Financial has come out with its graph on forward premiums inching higher.

The Rupee has recovered some of its lost ground against the Dollar since the past 1-week, recovering from its record low of 52.73 to inch towards 51.20 levels this week. The fall in spot USDINR has broadly come on the back of slight ease in global uncertainties and steps by RBI to curb further INR depreciation.

This in turn has coincided with sharp spike in forward premiums, with the far-end 1-yr premia rising above 210 levels for the first time in nearly 4-months. With Rupee rallying over 1oo paise inside 2-weeks, exporters have not taken a big hit as compared to importers. This is partly due to 1-yr premium (on paise terms) rising over 60 paise, thereby leading to just 40 paise decline in 1-yr USDINR (from 53.96 to 53.56) during this period.

This in turn gives further opportunity for exporters to hedge their long-term USDINR commitments (more so if they have missed spot levels over 52.50). Moreover, with forward premiums starting to rise, this in turn could also be a sign that the recent uptrend in spot USDINR could be near its end.

The below graph shows movement in USDINR and 1-yr premium since March 2011

 

 

 

 

 

 

 

 

 

 

 

 

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