Weekly forex hedging guide

Please find attached herewith 'WEEKLY FOREX HEDGING GUIDE FOR CORPORATES' dt  21st Oct 2013. This guide keeps you aware of the movements in USD/INR,  EURO/INR,  GBP/INR,  EURO/USD,  and GBP/USD and keeps ready with the strategies for the same in the coming week.  

Brief on USD/INR:  

Last week, it opened at 61.1500, high / low at 61.9450 / 60.9300, and closed at 61.2300 as against earlier week's closing at 61.0100.

Last week, we had expected that the currency may move next week in a range of 60.55 – 62.25. Importers were accordingly advised to settle short term payables at market rates, to hedge medium term payables at current levels, and to leave long term payables open. 

During the week, the currency moved within 60.9300 – 61.9450 as per expectations. The Currency had been well supported by 3QMA (presently at 61.10). It may be noted that during last 12 days, the closing has been within 61.94 – 61.01 i.e. within a small range of 93 paisa. The currency has been running below 21DMA (presently at 61.93) since 10^th Sept’13. The currency is also running below following major moving averages: 5WMA (61.68) / 5MMA (61.97) / 50DMA (63.17) and is running above 3WMA (61.22) / 61.10 (3QMA) / 60.80 (21WMA). These averages are likely to act as resistances and supports respectively in future.  The Crossover signal on daily chart is continuously running negative since 9^th Sep’13; though it is yet to give negative signal on weekly chart. 

Six weeks ago, we had given a matrix of behaviour of the currency during last 5½ years and on the basis of past depreciation / appreciation, probable bottom targets for USD/ INR were extrapolated to be 61.40 - 60.00 – 58.50. These targets were expected to be achieved during next six months. Out of this, first target of 61.40 has been achieved during the week ending 4^th Oct’13.

Going forward, it is expected that in case the currency is able to surpass its immediate resistance of 61.95, it may move further ahead towards 62.35 / 63.15.

Importers are advised to hedge short term and medium term payables at current levels. Long term payables may still be left open.  Pl note that we have been advising since 15^th Sept’13 onwards to leave long term payables open.

Exporters are advised to settle short term receivables at market rates. Hedging for medium term receivables may be started, once retracement starts and rate starts moving above 61.95. Long term receivables may be hedged around 63.00.

Major Resistances        : 61.95 / 62.35 / 63.15 

Major Supports              : 60.80 / 60.45 / 59.80    

For full report, please read the attached file.

With best regards,

DS Kapoor
Cost Accountant

Mobile: 9335091116; 9628411116

E-mail: dhyankapoor @ gmail.com

Encl: as above