Please find attached herewith 'FOREX HEDGING GUIDE FOR CORPORATES' dt 1st April 2013.
Brief on USD/INR:
Last week, it opened at 54.3500, high / low at 54.5100 / 54.0500, and closed at 54.2800 as against earlier week's closing at 54.3400.
Last week, it was opined that Dollar should weaken and move towards 50DMA (54.03); and once, 50DMA is broken, the currency may move towards 53.75 / 53.50. The movements have been on expected lines and the Currency moved down to 54.05. However, it did not go below and returned back to 54.51 and finally closed at 54.28. Now, nine weeks have passed (after Sept 2011), since when 50DMA has been running below 200DMA. Once again currency has managed to close above 50DMA (54.03), but is still below 200DMA (54.53) / 50WMA (54.47). It is also above 3QMA (54.03) / 5QMA (53.69). Pl note that 13MMA (54.14) has gone above 3MMA (53.96), which indicates about impending weakness in Dollar. Last week, we had discussed about two possible scenarios, out of which, brighter chance are of the 2nd scenario i.e. Dollar to remain range bound within 53.50 to 55.00 for few weeks more. We expect this scenario to continue till May end, after which, we may expect clear direction of the currency. Our preferred view is that after that, dollar should weaken further, unless any extraordinary circumstances happen in India or at world level.
This week, we expect that Dollar should remain range bound within 54.00 to 54.55. However, one should be watchful for next 7-8 days, as if & once, it moves below 54.00 / 53.85, it may swiftly move towards 53.50 or so.
Importers should be watchful and once the rate comes down, should hedge 3rd installment (15%) of medium to long term payables within 53.75 – 53.50 (30% have already been hedged).
Exporters may cover their short to medium term receivables at / around current levels of 54.28. The target should be 56.00 plus (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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