Work from home still not an option for currency traders amid coronavirus

Most in India’s financial capital are working from home to avoid novel coronavirus (COVID-19), but those in the treasury department, especially the traders, are not so fortunate, even as activities in the department have come down to a trickle. 

Equities and bonds can be traded through web-based platforms (NDS-OM Web for bonds), but it is a bit complicated in case of currency trading. 

In currency, the interbank rates can be availed only through a few platforms, including Murex, Calypso, and Reuters. These are installed in fixed computer terminals at the treasury floor. There are alternative applications that can be installed on mobile phones too, but they may work with a minor lag, which means interbank offers may not get truly captured. That is why it is important that traders must be present in front of the terminals for trading.  

“The system slows down if you are not at the terminal. There is hardly any good alternative than coming to office for trading,” said the head of treasury of a foreign bank. 

However, considering the gravity of the situation, banks and currency brokers are ready to give a leeway to that too. 

For example, a private sector bank has told half of its treasury staff to work from home from Monday, said the head of treasury of the bank. But the bank has not yet decided how to ensure smooth functioning of the trading floor. 

“It is not so much a problem in the other functions of the bank, but treasury is a minute by minute game,” said the treasury head. 

Still, fearing the worse, traders are being given new laptops with the trading platforms installed to trade from home. A few skeletal staff would always be present as part of the business continuity plan. 

“We are being given laptops, but that is the last option. As far as possible we need to come to the office, and we have been told trades will be bare minimum,” said a currency trader with a bank. 

In a bank treasury, there are two main activities — the front desk consists mainly of traders, and the backend is where the reconciliation and settlement operations take place. Surprising as it may sound, it is the backend that is more needed to be in office to meet with compliance. It is a process that has to be done at the site, using the bank’s systems. But here, too, banks are asking people not directly involved in settlement to work from home. 

However, it is a different case with currency consultants and corporate treasury altogether. 

“Consultants are mostly working from home, and corporate clients are placing their orders with banks over phone or even placing orders in the market through from web-based platforms,” said Ritesh Bhansali, vice-president at Mecklai Financial.

“Hedging activities have come to an almost standstill and corporate clients are only placing orders that would ensure just the daily business,” Bhansali said. 

Given the currency’s volatility, exporters have stopped hedging altogether, but importers are also not willing to hedge when the rupee is at a near record low level. The expectation is that the rupee will strengthen once the COVID-19 scare comes to an end. 

The daily trading volume in rupee in the onshore spot market is about $30 billion. Currency dealers estimate the volume has crashed to less than a third due to the virus scare. The thin volume is also creating volatility as any lumped up demand for dollars, or relatively low dollar sales by the RBI, is changing the course of the exchange rates. 

The rupee ended at 74.27 a dollar, almost same as its previous close of 74.25 a dollar. During the day, rupee traded in the range of 73.86 to 74.32 a dollar.