Forex Portfolio Management “THE CUTTING EDGE"

Cutting edge?….. as an effective Portfolio and Risk Management facilitates mitigation of costs/losses and represents a significant source of competitive edge. Recent volatility in the Forex market, has re-emphasized the importance of a well-planned and systematic treasury management approach. Off-late there has been a paradigm shift in the Indian Forex market whereby Rupee has not only moved two-way against the US Dollar but it has also staged phenomenal volatility against the other major currencies like Japanese Yen, Euro and Pound Sterling. These wild fluctuations in the currency market exposes the corporate to a great degree of risk and thus makes it imperative for them to monitor their exposure very closely.

A good foreign exchange policy is critical to the sound risk management of any corporate treasury. Without a policy, decisions are made ad-hoc and generally without any consistency and accountability. It's important for treasury personnel to know what benchmarks they are aiming for and it's important for senior management or the board to be confident that the risks of the business are being managed consistently and in accordance with overall corporate strategy. This approach helps eliminate the panic factor as all outcomes have been considered including 'worst case scenarios', which could result from either action or inaction. However even though the worst case scenarios are considered and plans ensure that even the 'worst case scenarios' are acceptable (although not desirable), the pre-planning focuses on achieving the best result.

Keeping the above in perspective, we at Forex Capital Services (P) Limited assist our esteemed clients in the following three broad areas of Risk Management –

1. Identifying the nature of exposure
2. Evaluation of Risk & Reward
3. Choosing the Risk Hedging strategy

However, before devising any strategy a lot depends on the corporate philosophy and its attitude to risk. Apart from the company’s willingness to take risk in pursuit of rewards, equally relevant are its financial strength, nature of business and its vulnerability to adverse movements. In short there can be no single strategy appropriate to every business.

Having ascertained that, we at forexcap assist our clients in taking a decision about the timing and choice of the hedging instrument. Apart from this, equally relevant are the wide variety of interest rate risk exposures that needs to be identified, measured, monitored and controlled.

The absence of a strategy often has the effect of mismanagement of an exposure because typically people are only jolted into action when something goes wrong. Streamlined information, proper checks and controls, identification of targets and objectives are some of the features of our forex portfolio management. We firmly believe that any hedging decision involves proper planning and should be taken on cost-base and not on market driven sentiments. Our Forex Portfolio Management goes beyond the day-to-day advise on whether to book forward or not. We essentially monitor the exposure right from its inception stage till the last stage and advise accordingly based on short term or long-term exposure. Hence, we ensure that proper MIS reporting system (which is the backbone of our Portfolio Management service), checks and controls are in place so that our decisions are based on factual position rather than ad-hoc advises.

In this fast-changing scenario, one of the most critical task faced by any corporate or treasurer is to be abreast with the regulatory changes and the new and innovative financial engineering products being introduced in the market everyday. We not only keep our clients well informed on these aspects but also evaluate its applicability for the client’s benefit. Being a research house, we also customize and structure derivative products in order to achieve the single goal of every Treasury Department i.e “Minimise Loss; Maximise Gain”

Though, we have been efficaciously providing Portfolio Management service to some of the biggest corporate houses in India but very soon we are going to add a new dimension to it by introducing e-portfolio Management whereby our clients can keep a track of there Forex Portfolio sitting in any part of the world by simply logging on our site and opening there exclusive account with us. Till such time, we invite you to see a presentation highlighting the scope of our Portfolio Management service in detail.

For the presentation click here

In case you wish to know more about this service or want to understand our MIS reporting in detail, please write to us at info@forexcap.com