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Strategy Outlook of the day

Currency Outlook of the Day - 22 October 2019

  • The Brexit vote did not happen on Saturday as MPs passed the Letwin amendment which requires an extension to be sought first as an insurance so as to avoid a no deal Brexit if the deal comes apart for some reason. The speaker yesterday did not allow a Yes/No vote on the deal secured by Johnson. The legislation i.e. the withdrawal amendment bill needs to be passed in the Parliament first before a vote can happen. The passage of the withdrawal bill gives MPs an opportunity to initiate amendments such as UK being in a customs union and conducting a second referendum. The government intends to get this legislation passed by Thursday. The vote on the withdrawal amendment bill is to take place today. PM Johnson was compelled to formally request an extension from the EU under Benn act. If the EU does not grant an extension and of the UK Parliament does not vote in favor of the deal, UK could crash out on 31st Oct (remote possibility)
  • Overall global risk sentiment is up beat. US yields are higher across the curve. The curve has steepened further as well. However, yields on German bunds have risen even more which explains the strength in Euro. With the German government now indicating willingness to ease fiscal, the ECB may tone down its dovish tone, especially considering the adverse effects of negative rates and a flat curve on the EU banking system. The quantum of negative yielding debt which had reached close to Usd 18tn is now down to usd 13.8tn. A sell off in global bond markets could spell trouble for several institutions (especially real money) who have amassed huge quantities of bonds at negative yields as it would leave liabilities underfunded.








Option Analytics - 14 October 2019

As per current market scenario, we suggest importers to go for Seagull Option strategy (November 2019 Expiry).

Option

Strike Price

Action

Premium

Call

71.50

Buy

-0.52

Put

70.50

Sell

0.21

Call

72.50

Sell

0.21

Premium to be paid

        0.10


Below are the different scenarios for the given strategy.

Case I:  If the USD INR pair expires below or at 70.50 on maturity, then the importer’s rate would be hedged at 70.60 which is better than the current forward rate (71.50). 

Case II:  If the USD INR pair expires between 70.50 – 71.50 on maturity, then the importer’s rate would be hedged at Spot + 10 Paisa. For eg: If the USDINR pair expires at 71.00 then net realization rate would be (71.00 + 0.10) = 71.10. 

Case III: If the USD INR pair expires between 71.50 - 72.50 on maturity, then the importer’s rate would be hedged at 71.60 which is 10 paisa higher than the current forward rate (71.50) but the upside risk up to 72.50 levels will be managed. 

Case IV: If the USD INR pair expires above 72.50 on maturity, then the importer’s rate would be hedged at spot – 0.90. For eg: If the USDINR pair expires at 73.00 then net realization rate would be (73.00 – 0.90) = 72.10.

Chart of the Day - USDINR

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USDINR pair witnessed a gap down opening of 23 paise, currently hovering around 71.00 mark. Technically, the pair is expected to trade in the range of 70.30 - 71.40. Either side break of the given range is likely to guide further direction.

IFA Global Proprietary model based on various techno-fundamental factors suggests USDINR Outlook for given timeframe. The index for computation of barometers includes pre-defined and back tested strategies.

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Our Take on the Market

IFA

CNBC Awaaz Pehla Sauda Mr. Abhishek Goenka IFA Global

18 Sep 2019

Interview of Mr. Abhishek Goenka - CEO & Founder, IFA Global sharing his insights on the Rupee.

Demand side vs. Supply side economics - Debate Resurfaces |

The Rupee has been spooked by a combination of global and domestic factors. It has depreciated nearly 3.5% in a matte...

Based on my experience of managing over 1000 clients over the last 2 decades, here are the "9 common mistakes to avoid as a treasurer" | Abhishek Goenka

Based on my experience of managing over 1000 clients over the last 2 decades, here are the "9 common mistakes to avoi...

A break below 72.90/$ could push rupee to a new all time low | Abhishek Goenka

The level of 72.90 is a crucial resistance for the USD/INR pair, break of which could push it to a new all-time high....

Low Volatility Regime likely to continue in Rupee | IFA Global

Rupee has been trading in an extremely narrow range 68.30-69.20 against the US Dollar for quite some time. Implied vo...

What is making rupee stronger against the USD? Here are 4 possible scenarios for 6 months | Abhishek Goenka

We may see some volatility on account of domestic election results in the short term but do not ...

IFA Blogs

We put together our take on the major domestic and global factors driving risk sentiment over the medium term with special emphasis on political developments, monetary policy outlook and fiscal policy implications.

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- Chairman, Creative Textile Mills Pvt Ltd, Mumbai

We have been associated with IFA Global for 4 years now. I can only tell that they have taken away a lot of my burden from foreign exchange. Previously, whenever I used to do; half of my time would go into analysing whether the market will go up or down. Now I am free, these guys are taking care of it very well. Transparent, Honest and Hard Working, can’t get better than this.

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We have been associated with IFA Global for more than 5 years. We are exporters and happy to inform that every morning we talk on business and we are able to make good decisions on Forex. We have good relationship with the firm and the people of the firm. Able to discuss and share our business as well as personal issues. People in the firm are excellent at large.

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Treasury Elite Conclave - 23rd February 2018

Structural Reforms in Indian Economy: Is the growth push inevitable?

location Boundary Hall, MCA Club, BKC

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Road Ahead: Changing landscape of India INC

location Boundary Hall, MCA Club, Bandra Kurla Complex, Mumbai.

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Treasury Elite Conclave – February 2017

Budget 2017 – Impact on Financial Markets

location Boundary Hall, MCA Club, BKC

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Treasury Elite Conclave – October 2016

Financial Sector Reforms: Role of Markets, Institutions and Regulators

location Boundary Hall, MCA Club, BKC

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Treasury Elite Conclave – August 2016

Global Financial Markets and Credit Scenario 2016-17

location Boundary Hall, MCA Club, BKC

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2005

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Over the last decade and a half, IFA Global has become a trusted name in delivering Treasury Solutions. We engage with clients to evolve a treasury strategy and streamline treasury operations, resulting in quantifiable monetary benefits and a sustainable competitive advantage. We have catered to over 950 clients from 40 different sectors. We have engaged with entrepreneurial startups, SMEs, Public Limited Companies and Multinational Corporations. We understand the expectations and set of challenges unique to each one of them. During the course of these interactions, IFA has developed a repository of tacit domain knowledge.

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