Sunday, 21 July 2013

Outlook on INR

According to a study by one of the rating agencies, about 45% of India Inc.'s forex debt
is short term in nature.    This amounts to approximately $100 billion.    Further, as per
the report, this forex debt is unhedged.    Come September, the US Federal Reserve bank
may tighten it QE3 programe.

Imagine a scenario when these corporates suddenly rush to the markets to hedge their
exposures coinciding with the Federal Reserve's decision to scale down its QE3.
It will not be a pretty sight to be watched by the faint hearted person.

No wonder, the RBI and the government of India woke up before the nightmare.

1 comment:

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