Once-bitten importers rush for forward dollars

Importers rushed to buy forward dollars and that too for a longer maturities so that they are not caught on the wrong foot like last year. When the rupee had appreciated in March-April last, panicky exporters rushed to sell dollar receivables.

Importers, on the other hand, were sitting tight waiting for further appreciation of the rupee to book their payment obligations.

This time around, there is a change in tack. Forex dealers said this is evident from the fact that even though the spot rupee has appreciated by 3.26 per cent in last five trading sessions and continues to remain firm, premiums on the forward dollars are high.

"Earlier, importers used to cover near-term but this time they do not want to miss the bus," said a dealer.

The last time around, when the spot rupee fell from 43.20 levels to 46.50 to a dollar, most of the importers were caught offguard with open positions. This time, not wanting to take a change, they are covering up as much as they can.

Even as the rupee rose to seven-month high and breached 44 to rule at 43.60 to a dollar on Monday, forward dollars across tenors continued to rule in premium. The last time when the rupee appreciated to 43 levels, forwards were sold at a discount.

Under pressure from the importers, forward dollars for six months and one year (annualised) closed at 1.56 per cent and 1.44 per cent, respectively, today, as against 1.05 per cent and 1.33 per cent on Monday. However, the one-month forward continued to fetch higher premiums, at above 2 per cent, which is similar to the levels a week back.

Dealers said forward dollars would have gone up much more but for greenback sales by exporters who are frantically unloading.

The spot rupee, on the other hand, also depreciated after a continuous rally lasting a week. It opened lower at 43.69/70 per dollar as against a close of 43.60 on Monday. It lost fresh ground today to 43.82 before closing at 43.70/71.

The rupee started the week by touching a ten-month high against the dollar at 43.60 following the global weakness of the American currency, sustained foreign exchange inflows and panic selling by exporters.

The Indian unit gained by Rs 1.47 or 3.26 per cent in the last five trading sessions since November 30. On Monday alone, it gained by about 50 paise or over 1 per cent.