Importers are rushing to hedge their dollar positions amid the sharp depreciation of the rupee against the American currency and expectations of further volatility even as exporters are holding off after suffering mark-to-market (MTM) losses on earlier hedges.
The Indian rupee, which has depreciated 1.1 per cent so far in August, is expected to decline further on the back of a strengthening US dollar and a weakening Chinese yuan, according to a Business Standard poll of analysts. The Indian rupee hit an all-time low recently, closing at 83.15 per dollar. Five of the 10 respondents said the Indian currency might touch 83.5 per dollar in August itself, while others said the worst could be over.
If we are able to get our act together, we may be able to see growth climb again to more than eight per cent, says Jamal Mecklai.
Given the stability of the rupee over the last 10 months, many companies have been tempted not to hedge their foreign currency risk.
Going by the real effective exchange rate, the rupee is overvalued
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