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  • Hedging of Foreign Exchange Risk by Corporates in India

    Transféré par

    Aashima Gupta
    42 vues12 pages
    This document discusses hedging of foreign exchange risk by Indian corporations. It begins with an introduction to forex hedging and foreign exchange risk management. It then outlines the framework for risk management including forecasts, risk estimation, hedging, and reporting. The main hedging instruments available are discussed including forwards, futures, options, and swaps. Specific examples are given of major Indian corporations like Reliance Industries, Maruti Suzuki, and Infosys that use hedging techniques like currency swaps and forward contracts to manage their foreign exchange exposure from exports, imports, and foreign currency revenues and costs. The document concludes with a case study on how cheap Swiss loans and low currency hedging costs are

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    This document discusses hedging of foreign exchange risk by Indian corporations. It begins with an introduction to forex hedging and foreign exchange risk management. It then outlines the framework for risk management including forecasts, risk estimation, hedging, and reporting. The main hedging instruments available are discussed including forwards, futures, options, and swaps. Specific examples are given of major Indian corporations like Reliance Industries, Maruti Suzuki, and Infosys that use hedging techniques like currency swaps and forward contracts to manage their foreign exchange exposure from exports, imports, and foreign currency revenues and costs. The document concludes with a case study on how cheap Swiss loans and low currency hedging costs are

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    42 vues12 pages

    Hedging of Foreign Exchange Risk by Corporates in India

    Transféré par

    Aashima Gupta
    This document discusses hedging of foreign exchange risk by Indian corporations. It begins with an introduction to forex hedging and foreign exchange risk management. It then outlines the framework for risk management including forecasts, risk estimation, hedging, and reporting. The main hedging instruments available are discussed including forwards, futures, options, and swaps. Specific examples are given of major Indian corporations like Reliance Industries, Maruti Suzuki, and Infosys that use hedging techniques like currency swaps and forward contracts to manage their foreign exchange exposure from exports, imports, and foreign currency revenues and costs. The document concludes with a case study on how cheap Swiss loans and low currency hedging costs are

    Droits d'auteur :

    Attribution Non-Commercial (BY-NC)
    Téléchargez comme PPTX, PDF, TXT ou lisez en ligne sur Scribd
    Signaler comme contenu inapproprié
    sur 12

    Hedging of Foreign Exchange Risk By Corporates in India

    Introduction To FOREX
    Forex Hedging
    Foreign Exchange Risk Foreign Exchange Risk Management

    Program Major Currencies in FOREX Market

    Framework For Risk Management


    Forecasts

    Risk Estimation
    Benchmarking Hedging Stop Loss Reporting & Review

    Hedging Instruments
    Forwards

    Futures
    Options Swaps Foreign Debts

    Matching Money Market Hedging Multi-Lateral Netting

    Currency Swaps

    Leads & Lags

    Techniques of Hedging

    Currency Options

    Invoicing & Currency Clauses

    Currency futures

    Forward Currency Transaction

    Hedging of Forex Risk in Indian Corporates

    Instruments Reliance Industries Currency Swaps Options Contracts Forward Contracts

    Currency(mn)

    Rs (Cr)

    Nature of exposure

    1064.49 2939.76 5764.10

    Earnings in all businesses are linked to USD. The key input, crude oil is purchased in USD. All export revenues are in foreign currency and local prices are based on import parity prices as well.

    Maruti Udyog Forward Contracts 6411 (INR-JPY) 70 ($-INR) Import/Royalty payable in Yen and Exports Receivables in dollars.

    Currency swaps Mahindra and Mahindra Forward Contracts

    124.70(USD -INR)

    Interest rate and FOREX risk.

    350 (INR-JPY) 2(INR-EUR) 27.3($-INR)

    Trade payables in Yen and Euro and export receivables in dollars.

    Currency Swaps Arvind Mills Forward Contracts

    5390 (JPY-INR)

    Interest rate and foreign exchange risk.

    152.98 ($-INR) 2.25 (GBP-INR) 5 (INR-$)

    703.67 21.88

    Most of the revenue is either in dollars or linked to dollars due to export.

    Option Contracts

    122.5 ($-INR)

    547.16

    Infosys Forward Contracts 119 ($-INR) 529 Revenues denominated in these currencies.

    Options Contracts Range barrier options

    4 8 2 3

    ($-INR) (INR-$) ($-INR) (Eur-INR)

    18 36 971

    Tata Consultancy Services Forward Contracts 15 (Eur-INR) 21 (GBP-INR) 830 ($-INR) 47.5 (Eur-INR) 76.5 (GBP-INR) 265.75 Revenues largely denominated in foreign currency, predominantly US$, GBP, and Euro. Other currencie include Australian $, Canadian $, South African Rand, and Swiss Franc

    Option Contracts

    4057

    Ranbaxy
    Forward Contracts 2894.589 Exposed on accounts receivable and loans payable. Exposure in USD and Jap Yen

    Dr. Reddys Labs Forward Contracts 398 ($-INR) 11(Eur $) Foreign currency earnings through export, currency requirements for settlement of liability for import of goods.

    Options Contracts

    30 (EUR-$)

    Case Study

    Cheaper Swiss Loans & Low Currency Hedging Cost A BIG DRAW FOR INDIAN FIRMS

    10

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    Presented By: Aashima Gupta 01 Abhay Kumar 02 Harsha Khandelwal 25 Sheetal 69


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