Weekly forex hedging guide for corporates

Please find attached herewith 'WEEKLY FOREX HEDGING GUIDE FOR CORPORATES' dt  3rd June 2013.

Brief on USD/INR:  

Last week, it opened at 55.75, high / low at 56.76 / 55.52, and closed at 56.57 as against earlier week's closing at 55.81.

Last week, it was opined that once Rupee surpasses the earlier week’s high of 56.01, it can move towards 56.30; and in case Rupee closes below 55.55, there should be possibilities of profit booking and Rupee may then start strengthening with the likely first target of 55.10, where it may get support. Rupee did not close below 55.55, rather surpassed 56.01 on Tuesday itself and then weakened up to 56.76, 46 paisa more than as expected by us and then finally closed at 56.57. Now, the Currency has surpassed all its earlier tops, except which was created in June 2012 (57.3250).

The main reasons behind the rupee weakening during last three weeks (before last week) had been weakening of Euro, Yen and GBP (having a total weightage of 83.1% in Dollar Index) against USD, However, in spite of some strengthening in Euro, GBP & JPY against USD, Rupee once again weakened by 76 paisa during the last week. The main reason this time has been month-end buying from Oil Marketing Companies.

Presently, the Currency is moving above all its important moving averages: 3QMA (55.28) / 5WMA (55.17) / 3MMA (54.84) / 50DMA (54.63) / 50WMA (54.58) / 5MMA (54.43) / 200DMA (54.33) and these should act as major supports in case of correction.

This week, we expect that Rupee should consolidate around current levels / within 57.05 – 56.35. Once this consolidation is over and if Rupee closes below 56.35, it may start strengthening. The broad range expected for the week may be within 57.05 – 55.75.   

Importers are advised to wait for correction and currency to reach around 55.00 for taking hedging decision.

Exporters are advised to continue covering receivables around current levels in staggered way. For reference purposes, the target rates for Sept end receivables should now be in between 57.00 to 58.00.

With best regards,

DS Kapoor
Cost Accountant

Mobile: 9335091116; 9628411116

E-mail: dskapoor @ sify.com

Encl: as above