View the Currency presentation - ICICI Direct
View the Currency presentation - ICICI Direct
View the Currency presentation - ICICI Direct
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How is currency a risk – more examples...<br />
• Mr. XYZ imports goods. He is expecting delivery of his contract next month and has to<br />
pay USD 10 million at <strong>the</strong> time of goods delivered.<br />
• If today USD-INR rate is 55.60, XYZ has to pay INR 55.60 Cr. (10*10^6*55.60 = 55.6 Cr).<br />
• By <strong>the</strong> time of payment, if USD-INR moves to 57.30, Mr. XYZ will have to pay INR 57.30<br />
Cr. He will have to pay additional INR 1.70 Cr.<br />
• In a situation, USD-INR changes to 53.50 at <strong>the</strong> time of delivery, Mr. XYZ will have to pay<br />
INR 53.50 Cr. A gain of INR 2.10 Cr.<br />
• In above situations, Mr. XYZ will gain or lose basis exchange rate movement in<br />
USD-INR, for which he has no control.
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