Offshore forwards shoot up with dollar inflows for share sales
Business

Offshore forwards shoot up with dollar inflows for share sales

By Dan Neff

Synopsis

“Overseas investors are likely to have entered into short-term contracts in the NDF market,” said Anindya Banerjee, currency analyst at Kotak Securities. This raised demand for dollars at a future date, sending premiums higher. Also, US Fed commentary cuts short positions in dollars with traders going long. “Elevated premium leaves an opportunity for arbitrages especially when local forward premiums are little changed,” he said.

MUMBAI: The forwards premium, a gauge for hedging demand, shot up as much as 35 basis points in the offshore derivative market in the past six weeks when global investors began to pour money in local companies’ share sales.

Elevated premiums pave the way for arbitrage opportunities with local premiums showing little signs of rising.

“Overseas investors are likely to have entered into short-term contracts in the NDF market,” said Anindya

BY

ET Bureau

4 mins read, Last Updated:

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Dan Neff