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Currency Hedging in India

Created by : Urvish Pankajkumar Subodh, Guest Lecturer (Economics), H.L.College of Commerce- H.L. Institute of Commerce.  | 05 07 2010 11:14:01 +0000
Industry : Hedge Funds/VCs/Private EquityFunctional Area : Derivatives(Markets)
Keywords : hedging
Activity:  603 views;  last activity : 07 06 2010 20:18:09 +0000
 
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Is still under developed Vs Is at a stage where it should be
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I agree with your statement & the main reason for same is lack of awareness among all. Although many companies now doing this practice but not whole. The main benefit of currency hedging is to minimize the risk and loss to the investor. It 'll hedge the exporters position along with the movement in foreign currency. It is a great way of dealing with international investment opportunities. Even with such good risk protection incorporated into the technique, the investor still has the same ability to make substantial profits. Currency hedging gives investors the peace of mind to invest in opportunities that would otherwise have been considered too volatile.

It would also provide protection against commodity price changes, inflation, currency exchange rate prices, economic depressions and more.
By Vipin Bhasin, Private Equity/Hedge Fund/VC-Manager, Indian Investment Co.  05 08 2010 10:03:16 +0000
 
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I think Hedging is in the right stage..... Hedging has increased due to the increased global linkages and volatile exchange rates. Firms need to look at instituting a sound risk management system and also need to formulate their hedging strategy that suits their specific firm characteristics and exposures.

So firms wake up and start utilizing it..... :)
By Esha Johar, Risk Analyst, Irevna  05 08 2010 07:31:42 +0000
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@Mathew Sir : which Means that there is a need in our country for professionals to under go a way (possibly training) to knw abt hedging strategies...

also to note that Appreciation will make exports expensive which will lead to loss but this appreciation can be hedge and companies can deal with this losses along with the development of the Derivatives market...
By Urvish Pankajkumar Subodh, Guest Lecturer (Economics), H.L.College of Commerce- H.L. Institute of Commerce.  | 05 08 2010 16:29:22 +0000
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I believe United Stock exchange of India will make a difference in currency hedging as in there will be less OTC deals and more of Forwards via the exchange. this will also reduce credit risk which was involved in OTC market...

please correct me if I am wrong...
By Urvish Pankajkumar Subodh, Guest Lecturer (Economics), H.L.College of Commerce- H.L. Institute of Commerce.  | 05 08 2010 10:25:03 +0000
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With developing MNC's in India is it that the companies in India are Hedging against currency exposure or still there is a need to develop Currency Hedging. This question was in my mind because i wanted to conduct a research for the same topic. Also to note about a question That introduction of United Stock Exchange of India will do some reforms? The reason for hedging is that has been proved with number of Advantages like Tax Shield(Progressive tax Structure) and Value of the firm increases.
By Urvish Pankajkumar Subodh, Guest Lecturer (Economics), H.L.College of Commerce- H.L. Institute of Commerce.  | 05 07 2010 11:14:01 +0000
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good source to use market for profits and growth.
By puneet , Manager Admin  | 05 19 2010 17:39:02 +0000
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I feel some of the first few made use of this hedging in currencies were Infosys and textile exporters of Tirupur. Those at Thirupur were I think drawn into a complicated hedging strategy followed by some money makng advise from their advisory banks which got bombed and their investments were lost. Infosys I believe broke even and is still doing it. I think many companies are in the process now since the currency is appreciating and we will know what happened in the due course of time.

 
By Mathew Cherian, Research Associate/Analyst, Western Michigan University  | 05 08 2010 16:22:37 +0000
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Argue for "Is at a stage where it should be"
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