Rupee: Forwards premium on Rupee-Dollar soars up to 360 bps

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The rupee gained 0.20 per cent to close at 73.93 to a dollar Monday. It may extend losses up to 75 to a dollar once the forwards premium starts dropping, dealers said.

Synopsis

The cost of covering unhedged currency risks in the derivative markets surged on Monday, potentially affecting companies with large import bills, with the one-month onshore forwards premium on the rupee-dollar pair spiking up to 360 basis points through the trading session.

MUMBAI: The cost of covering unhedged currency risks in the derivative markets surged on Monday, potentially affecting companies with large import bills, with the one-month onshore forwards premium on the rupee-dollar pair spiking up to 360 basis points through the trading session.

The unusual movement is attributed to several factors: Inbound dollar flows for the PowerGrid initial offer, a legal tussle between the government and Cairn Energy

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