How can corporates use the ETCD platform to hedge their forex? Gaurang Somaiya explains

economictimes.indiatimes.com:

«We are expecting that this low volatility could still continue. So, there has been this tussle which has been going on between the bulls and the bears,» says Gaurang Somaiya, MOFSL.First thing I want to ask about is the volatility in rupee which is at a multi-month low. Now, this is making Indian corporates a bit complacent in terms of the hedging in their currency. Is that what you are seeing? What is your understanding here?Yes, we are seeing a bit of complacency coming in from these Indian corporates and as you correctly mentioned that yes, volatility has been at a multi-year low actually.

We are expecting that this low volatility could still continue. So, there has been this tussle which has been going on between the bulls and the bears. We are seeing that the rupee is getting supported because of the FII flows but at the same time there has been active intervention going on by the RBI.

So, this is again letting the rupee curb a bit of losses as well. We are seeing that the FX reserves are close to over $600 billion. So, all this is kind of keeping the rupee quite stable overall.If I want to understand, what is your suggestion to corporates who are actually not participating or not hedging? What should they be doing and could you just highlight in terms of the importance of hedging and benefits that one could as a corporate have by hedging in the currency derivative market? I think one should be actually looking to hedge their positions.