FOREX RISK MANAGEMENT

How much did you really pay/ receive?
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The old financial year is over. The accounts are done and profit/ loss has been calculated. Hopefully you would have seen a good growth in turnover and profits. And, in the case of your Imports/ Exp ....


Forecasting
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Forecasts and Accountability Everybody loves a forecast and wants to know where Dollar-Rupee is headed. This is natural because forex is the business of every importer/ exporter. Even the RBI conduct ....


SUMPRODUCT Way of Calculating Weighted Avg
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Here's another very important MS Excel tip, one that I got from one of our clients. It has made my life so much simpler. Thank you, Krishnan! Need for Weighted Average Let us say there is a company ....


Enter the Date in DATE format in Excel
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98% of companies do not use specialized software to track their exposures (like Letters of Credit, Buyers' Credits, Rupee Packing Credit etc) and hedges (like Forward Contracts and Options). All the w ....


Importer is Short Dollars
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YOUR BOSS NEEDS TO SEE THIS I would be a rich man if I had a Rupee for every time I have heard the phrase "Forex is not my business" from corporates with forex exposures. Please show this article to ....


Drawbacks of Common Hedging Methods
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Forex risk management is a frustrating experience for most companies. There seem to be a thousand things that can go wrong at any time - the economy, the market, the forecasts, the regulations, the sh ....


Use forecast for budgeting
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An astounding thing we have encountered while advising companies on forex risk management is that almost no company has allocated a budget for meeting forex hedging costs. Companies may have voluminou ....


Cash Spot
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Cash-Spot is one of the lesser known technical concepts in the forex market. Nothing earth shattering, really, but it is always good to know the technical details of the market we operate in. The fore ....


Use a forecast for budgeting
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Most exporters price their goods on a “cost plus” basis. They add a certain cushion for forex volatility to their domestic costs and quote a Dollar price accordingly. Importers take whatever Dolla ....


The forward rate is not a forecast
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This might be a little basic for old hands in the market, but there is often a misconception among new entrants that the Forward Rate is a forecast of where the rate is going. For instance, if on 09-M ....


How about early delivery?
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Many clients we work with, especially SME clients, and more especially Exporters, tend to prefer an “Option Period” Forward Contract rather than a “Fixed Date” Forward Contract. Option Peri ....


Hedge in steps
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One of the most agonizing difficulties commonly faced by the risk manager is not knowing where the market is likely to go. This makes it nearly impossible for him to decide whether to hedge or not to ....


Hedge Exposure
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Most corporate risk managers refer to their hedges, such as forward contacts, as their "market position". They think that taking a hedge is the same as taking a trading position in the market. This is ....


USDINR Volatility
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Rupee Volatility has increased The last couple of years have been particularly painful for Corporate India in many ways. Forex Risk Management has been one of the ways by which several hundred crores ....


Challenging basic forex risk management concepts
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At a time when there has been a big jump in risk aversion in global financial markets, this article challenges two revered canons of forex risk management. The article will first build a case that com ....


Future of Dollar-Rupee Futures
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Gentle Reader, In this issue, we take a detailed look at the pros and cons of the to-be-introduced exchange traded Dollar-Rupee Futures The RBI has been working on the introduction of Rupee Futures ....


GBPUSD: Choosing a Put Option
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It is an open secret that every Corporate Hedger wants to pay no more than Zero for an Option that he buys. Banks oblige by constructing “zero cost” strategies. The concept of zero cost structures ....


Risk Management
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Good to be with you again, Gentle Reader! This issue talks about: The need for focusing on the Currency Risk Management Process in the Corporate sector Please keep those comments coming. We lov ....


Static or Dynamic Benchmark
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Very few companies have adopted a formal plan or strategy for managing FX Risk. Amongst the few that have, most work on the basis of a fixed (static) benchmark for the whole year. We think Benchmarks ....


Risk Management
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Netting – An outdated concept? A company has both Imports and Exports. Should it manage the FX Risk on both legs, i.e. on Gross basis? Or on the differential amount, i.e. on Net basis? Many compani ....


EURUSD Put
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In the issue dated 25-Aug-04 we presented the case of a corporate that stuck to its long term objective even in bad times on a currency swap that went very bad initially; but ultimately booked hands ....


Case Study 1 - A Dollar-Yen Swap
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In this Issue Series on Issues in Corporate Risk Management - Part 2 - Stick to Objectives Issues in Corporate Risk Management Keep the Objective in mind. It pays The definition of proper Obje ....


A tale of two e-mails
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A Tale of Two E-mails.....As many of you know, we provide a twice-daily trade recommendation service called "FX Thoughts of the Day". We are one of the several such services on the Internet and cann ....


GBPUSD Weekly Close
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FOLLOW UP - Bear SHS in Sterling? In the last issue we had pointed out a three decade old Downtrend Resistance on the GBPUSD Monthly chart, which presaged weakness in GBPUSD. Technical Analysis is ....


Case of a Swiss Franc Loan
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A few words…This is the second issue of “The Colour of Money” after its revival. Many of our old Readers have written to say they are glad to receive this publication again. We thank them for th ....


TWEETS


01Feb18 #Euro 1.2429: As expected, #Euro is ranged between 1.2475 and 1.2350 even after the FOMC. A break below 1.2… https://t.co/tIzmON0GyT

20 days ago  

31Jan18 #Euro 1.2435: Tonight is crucial. FOMC, State of the Union. Yesterday Mnuchin con... https://t.co/6dPYQfpEFO https://t.co/6dPYQfpEFO

21 days ago  

#EURJPY if falls towards 130, may pull down USDJPY and EURO in the coming sessions. http... https://t.co/OlTjArK0y3 https://t.co/OlTjArK0y3

41 days ago  

#EURJPY if falls towards 130, may pull down USDJPY and EURO in the coming sessions. http... https://t.co/OlTjArK0y3 https://t.co/OlTjArK0y3

41 days ago