The Hindu Business Line : Exporters taking forward cover

Banking sources said the inflows, which dropped to as low as $25 million a day in July till mid-August, had picked up substantially. At present, the inflows are estimated between $75 million and $100 million a day, though this is still considerably below the peak flows recorded early this year at $250 million-$300 million a day.

That the flows had increased is evident from the shrinking forward premia. The six-month forward premium has been about 1.6 per cent. During the peak of the oil price spike, it had overshot 3 per cent — the highest this year. This has been in line with the rupee's depreciation against the US dollar by close to 5 per cent since the beginning of this year.

But it is not against the dollar alone that the rupee's correction has been taking place, bankers said. Even against the euro, the forward premia for six months dropped to as low as 1.7 per cent, down from a peak of 4 per cent since the beginning of this fiscal year.

The spot euro-rupee exchange rate, which dipped to a low of Rs 57.5 last month, is now Rs 55.7.

Concerned over the appreciation of the rupee and the drop in premia, the sources said, exporters were rushing to take forward cover. The pointer to an appreciation was apparent from the non-deliverable forward (NDF) market quotes. Traders said in the NDF markets, the rupee is being quoted at Rs 45.25 to the dollar for one-month forward, against the domestic spot of Rs 45.35.

According to the bankers, one of the major factors driving the forward premia is the rollback of the tax on interest earnings for the non-resident depositors. Besides, some corporates have also lined up foreign currency convertible bond issues in the international markets. Further, large inflows are also expected in view of the NRI interest in some of the domestic public issues expected during the next few months. These include mega issues of the National Thermal Power Corporation Ltd.

Apart from the inflows, the bankers said, what also helped the rupee is the reduced foreign exchange demand from oil importers. Refining companies have now reduced their cover requirements with the fall in oil prices, bankers said.

More Stories on : Forex | Exports & Imports

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Inflation: Emerging economies different

Exporters taking forward cover

LIC campaigns to revive policies

Birla Sun Life first premium up 241 pc

Govt borrowings in April-Sept down at Rs 55,000 cr

Chidambaram may ask PSBs to trim SLR investments

PNB opens office in Shanghai

Bonds decline; rupee steady

Health cover for Andhra Bank credit cardholders

Gulf NRIs urge withdrawal of proposal to tax deposits

Yet, another one!