Our FX Advisory desk has been inundated with queries on how best to manage FX Risk during current extremely uncertain times. Below are the points we feel one should consider while managing exposures in such unprecedented times.
2020 was not only a tragic year for human lives but also for the financial world. World markets faced the highest volatility, putting the investors in a fix with respect to their next investment decision.
Below is a piece from our Forex Advisory desk outlining outlook for 2021. The Indian Rupee has been the worst-performing Asian currency in 2020.
Treasury Management System
The treasury management system is the backbone of a well-run treasury. A treasury cannot function in isolation. The effective functioning of the treasury depends on coordination with various external and internal stakeholders. A robust treasury management system ensures that the exchange of information between the treasury and the finance function or between the treasury and the senior management takes place in a seamless manner.
Casting my mind back, through a decade and a half of my journey in forex consultancy, I cannot think of any other event that has generated as much interest at the global level as the upcoming US presidential election and which is viewed as having far-reaching implications for US fiscal policy, global trade, the functioning of multilateral institutions, and dealing with climate change.
Market Research and Analysis
The overall trend of the US Dollar would be determined by US real rates. While nominal yields have remained stable despite the huge supply of treasury securities (on account of the continuing purchases by the US Federal Reserve), the inflation expectations have been more volatile.
In the past week, our forex advisory team has received multiple queries on the recent change in the guidelines for FX hedging. In this blog, we highlight the implications that the new guidelines would have on hedging future cash flows and answer a few FAQs.
The RBI monetary policy is due on Thursday. We have been highlighting in our recent client Forex Advisory reports, that the market is pricing in a 55% probability of a 25bps rate cut which would take the repo rate to 3.75% and reverse repo rate to 3.10%.
Our Forex Consultancy team has been receiving a lot of queries from clients regarding the recent aggressive USD purchases by the RBI. In this report, we examine various factors that may be driving the RBI reaction function.