Please find attached herewith 'FOREX HEDGING GUIDE FOR CORPORATES' dt 25th March 2013.
Brief on USD/INR:
Last week, it opened at 54.0000, high / low at 54.5600 / 53.8900, and closed at 54.3400 as against earlier week's closing at 54.0200.
Last week, we had opined that having already broken 50DMA, Dollar weakness should continue further with the targets to be watched around 53.60 and then 53.20. It was informed earlier that after Sept 2011, for the first time 50DMA has been running below 200DMA since last eight weeks. Last week during first two days, the movements were in the expected direction and the currency went down to 53.89, however due to European crisis and also political crisis at Centre, Dollar went up to 54.56 and finally closed at 54.34. It has thus once again managed to close above 50DMA (54.03), however is still below 200DMA (54.57) / 50WMA (54.41). It is also above 3QMA (54.05) / 5QMA (53.70). Pl note that 13MMA (54.15) has gone above 3MMA (53.98), which indicates about impending weakness in Dollar. Now, chart formations are indicating two possible scenarios: (i) Dollar weakens from here and breaks the major support around 53.10 – 53.20; (ii) It remains range bound, weakens slightly and goes towards 53.50 or so and reverses from there and remains range bound within 54 to 55 for about another 8 – 10 weeks. In the present circumstances, the possibilities of second scenario are looking more.
This week, it is expected that Dollar should weaken and should move towards 50DMA (54.03). Once, 50DMA is broken, it may move towards 53.75 / 53.50.
Importers, once the rate comes down, should hedge 3rd installment (15%) of medium to long term payables within 53.65 – 53.40 (30% have already been hedged).
Exporters may cover their short to medium term receivables at / around current levels of 54.34. The target should be around 56.00 (including premium) for Sept’13 receivables. Exporters need to continuously cover all short to medium term receivables around their benchmark levels to avoid unrewarding rates, till signs of bottoming out in the currency get visible.
For further details on USD, EURO and GBP, please read the detailed guide attached herewith.
With best regards,
DS Kapoor
Cost Accountant
Mobile: 9335091116; 9628411116
E-mail: dskapoor @ sify.com
Encl: as above
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