Adam Smith - EURO - INR Technical Analysis


Adam Smith Associates offers trade & commodity finance related services & solutions to its domestic & international clients. Views expressed in this article are purely of the author - Mr Rohit Srivastava - a leading technical analyst. Visit www.adamsmith.tv for services offered by Adam Smith Associates Pvt Ltd

EURINR
It is not easy trading a cross rate and so I think I got it wrong early. The EURINR failed to cross the 73 mark twice in 3 months that I wrote about it. While my view on the Euro played out this contract fell far more than expected due to the delayed decline in the USDINR in the face of a falling dollar. So the gains were completely given back. The lesson here is that while dealing in a cross rate you may hedge the cross currency. So a view on being bullish EURUSD means that the USD is going down and that the INR is going up. If both happen at the same time there is little impact but in this case that was not true. A falling USDINR therefore should be hedged with buying Puts on the USDINR contract. That would have definitely helped here. In short long the EURINR with a long USDINR Put as well to keep it hedged. The combination EURINR+USDINR = EURUSD, as INR cancels itself out


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