Companies with overseas liabilities rush to cover currency risk

Importers and overseas borrowers are rushing to cover their currency risk after the rupee fell to Rs 80 against the US dollar in both over-the-counter and derivatives markets on Thursday, leading to forward premium jumping 11-17 basis points across maturities on Friday.

One basis point is 0.01 percentage point.

With the rupee breaching the psychological Rs 80 versus the US dollar for the first time and the spot market USD-INR gauge heading towards that mark, companies that have significant overseas liabilities fear margin pressure will impact their nascent revival after the pandemic

Oil companies and diamond merchants are among those rushing to hedge against likely further fall of the rupee.

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