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The Reserve Bank of India's move to prop up the rupee failed to have the desired effect. The RBI had asked exporters to convert 50 per cent of their dollar holdings in their exchange earner's foreign currency accounts to Indian rupees within 15 days.
Though the rupee made an intraday high of Rs 52.97/$, it closed at Rs 53.43/$.
“Importers are waiting for the rupee to appreciate to buy the dollar spot,” said a forex dealer.
The RBI also recast the open position limit for banks at five times of the higher of their existing overnight or intraday limits. Open position limit is the maximum amount a bank can keep open to currency fluctuations.
Banks have to keep overnight limits as the forex market is a 24-hour market.
Corporates have their own hedging methods.
“We usually book forward contracts for 25 per cent of our exports at rates comfortable to us. But, this time we have covered 75 per cent of our receivables,” said Mr Sanjiva Gupta, President-Finance, Obeetee, a carpet exporter.
There are others with a natural hedge, being both importers and exporters.
“Seventy-five per cent of our production is exported, in which 35 per cent is imported content. Of the remaining 40 per cent, 10 per cent is deemed exports.
So we book forwards for half of our remaining receivables (15 per cent) and keep 15 per cent open,” said the CFO of a Delhi-based textile and soft-toy exporter.
> raghavendrarao.k@thehindu.co.in
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