Rupee down 20 paise against dollar in early trade
The rupee depreciated by 20 paise to 63.48 against the US currency in early trade today at the Interbank Foreign Exchange due to the dollar's gains against its rivals overseas. Forex dealers said besides the dollar's gains against other currencies overseas on robust US economic growth, increased demand for the American unit from importers and a lower opening in the domestic equity market kept pressure on the rupee. The rupee had weakened by 3 paise to end at 63.28 against the American currency yesterday due to sustained capital outflows and fresh demand for the US currency from banks and importers.Meanwhile, the benchmark BSE Sensex fell by 36.69 points, or 0.13 per cent, to 27,469.77 in early trade today.
Corporate sector running a huge forex risk with ECB: HemindraHazarit
Rupee was trading higher at 63.4175/4250 vs Monday's close of 63.24/25. Month-end dollar demand from oil companies fueled gains.Dollar rose on expectations of a rate hike by US Fed sometime next year.Pair was seen in 63.25 to 63.45 range during the day. There has been some recovery because of the US Federal Reserve statements. I continue to believe that the global environment remains very weak. Apart from the USA, all the other major economies are showing signs of weakness. Even in the domestic sector, the manufacturing date and the IIP data clearly suggest that things are the same. I do not think there is any significant improvement. I would also like to point out one interesting fact
which again is not getting noticed today; the massive ECBs raised by the corporate sector. As per the RBI data, as of end June, they had raised about $153 billion. This is about an $18 billion increase over June of last year. If you see that even after June, RBI has given approval from about July to October of about another $10 billion of ECB raising by the corporate sector. About a month and a
half back, the RBI made an announcement that only 15 per cent of these exposures are hedged. The issue here is that most of these companies disclosed by the RBI, which have got the approval to raise ECBs do not have a natural hedge. They are not exporters. With the rupee depreciating, and the current international situation being very fragile to the extent that any incident can spark off a run on emerging market currencies, corporate sector is running a very huge risk. The RBI has unfortunately allowed them to again raise funds at will. There has been a massive increase in ECB borrowing. The bulk of the exposures are hedged. Most of these companies or many of these companies do not have a natural hedge. So the combination of all these factors, and the fact that international environment is very fragile means that the corporate sector is running a huge forex risk.
The rupee depreciated by 20 paise to 63.48 against the US currency in early trade today at the Interbank Foreign Exchange due to the dollar's gains against its rivals overseas. Forex dealers said besides the dollar's gains against other currencies overseas on robust US economic growth, increased demand for the American unit from importers and a lower opening in the domestic equity market kept pressure on the rupee. The rupee had weakened by 3 paise to end at 63.28 against the American currency yesterday due to sustained capital outflows and fresh demand for the US currency from banks and importers.Meanwhile, the benchmark BSE Sensex fell by 36.69 points, or 0.13 per cent, to 27,469.77 in early trade today.
Rupee was trading higher at 63.4175/4250 vs Monday's close of 63.24/25. Month-end dollar demand from oil companies fueled gains.Dollar rose on expectations of a rate hike by US Fed sometime next year.Pair was seen in 63.25 to 63.45 range during the day. There has been some recovery because of the US Federal Reserve statements. I continue to believe that the global environment remains very weak. Apart from the USA, all the other major economies are showing signs of weakness. Even in the domestic sector, the manufacturing date and the IIP data clearly suggest that things are the same. I do not think there is any significant improvement. I would also like to point out one interesting fact
which again is not getting noticed today; the massive ECBs raised by the corporate sector. As per the RBI data, as of end June, they had raised about $153 billion. This is about an $18 billion increase over June of last year. If you see that even after June, RBI has given approval from about July to October of about another $10 billion of ECB raising by the corporate sector. About a month and a
half back, the RBI made an announcement that only 15 per cent of these exposures are hedged. The issue here is that most of these companies disclosed by the RBI, which have got the approval to raise ECBs do not have a natural hedge. They are not exporters. With the rupee depreciating, and the current international situation being very fragile to the extent that any incident can spark off a run on emerging market currencies, corporate sector is running a very huge risk. The RBI has unfortunately allowed them to again raise funds at will. There has been a massive increase in ECB borrowing. The bulk of the exposures are hedged. Most of these companies or many of these companies do not have a natural hedge. So the combination of all these factors, and the fact that international environment is very fragile means that the corporate sector is running a huge forex risk.
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