Hedging Policy
Hedging strategies are taken to minimize forex & interest rate fluctuation and to maximize profit on these transactions, especially when realization is on later dates. As per the companies realization of debtors and receivables goes, it is understood that the realizations are done within a period of maximum seventy days. In this kind of scenario taking thirty days to a maximum forty five days Straight Vanilla Forward cover or a Put option for the same period on the realizing currency will be prudent. Longer the hedging period, the interest rates are also on the higher side, so the discounting factor becomes more and realization is lesser. The current interest rates as on 17th November 2008, as per Saxo Bank screen rates are given below:-
Interest Rates
The rates displayed are the mid money market rates for the given interest rate periods. All rates are for information purposes only.
Currency |1 day |1 week |2 weeks |1 month |2 months |3 months |6 months |9 months |1 year | |EUR |2.5 |2.75 |3.25 |3.73 |4.08 |4.17 |4.2 |4.15 |4.15 | |USD |0.45 |0.55 |1.3 |1.5 |2.11 |2.24 |2.71 |3.6 |3.78 | |JPY |0.5 |0.58 |0.6 |0.69 |0.78 |0.8 |0.96 |0.95 |1.11 | |GBP |2.5 |2.85 |3.2 |3.15 |3.4 |4.13 |3.84 |4.3 |4.31 | |INR |6.9 |7.8692 |9 |10.5 |10.75 |10.75 |11 |11.4 |11.5 | |
More the period of delay in the delivery period more market influences will be discounted in the currency pairs which might result in not achieving the targeted revenue or might result in losses. The ...