INSUBCONTINENT EXCLUSIVE:
exchange market estimate that about 60-65% of offshore liabilities would still remain uncovered.
That should worry the regulator as unhedged
foreign exchange fluctuation risks can create financial stress for importers and lead to systemic risks if the rupee loses ground amid the
although a foreign bank estimated it around $60-65 billion in March
While importers have shown some urgency in covering their risks last week, experts said they are mostly covering short-term positions.
The
premium for buying forwards contract, a mechanism that allows buyers to fix future exchange rate at a current rate, has risen to 83.50-85.50
paise from 82.50-84.50 paise for six-month maturities
against exchange rate volatility and minimise losses on adverse movement.RBI made hedging mandatory for companies raising money through the
fouryear high, on concerns over the growing supply of government debt and inflationary pressures from rising oil prices
Analysts, therefore, expect the rupee to be under pressure in the next few quarters
A CARE Ratings economist expects the rupee to remain in a volatile range of 66.5-67.5 in May, while some analysts said the rupee could touch
68 by December.
A weaker rupee pushes up the domestic cost of fuel products, creating inflationary pressures and a pricing scenario that
demands a tightening in monetary policy
Deutsche Bank expects the central bank to raise repo rate by 25 basis points in June to 6.25%.
