Exporters Boost FX Hedging to Record $46.3 Billion as Rupee Depreciation Concerns Ease

Indian exporters significantly increased foreign exchange (FX) hedging activity in June amid changing expectations for the rupee, according to a report by CNBC TV18. The shift followed measures announced by the Reserve Bank of India (RBI) to attract dollar inflows and strengthen foreign exchange reserves.

Exporters booked a record volume of hedges during the month, while importers also increased protection against currency fluctuations. The trend highlights how corporates are responding to evolving currency market conditions and global economic uncertainties.

Exporters Increase FX Hedging to Record Levels

Exporters booked hedges worth $46.3 billion in June, marking a 45% increase compared to the same month last year. The figure was also 46% higher than the level recorded in May.

The surge indicates a notable shift in exporter behaviour as expectations of a prolonged rupee depreciation have weakened. Market participants increasingly opted to lock in exchange rates instead of waiting for further currency weakness.

RBI Measures Improve Rupee Outlook

The RBI announced several measures in June aimed at boosting dollar inflows into the country. These initiatives to attract between $40 billion and $80 billion, with a large portion potentially flowing into the central bank's reserves through a swap window.

These steps helped stabilise sentiment in the foreign exchange market and reduced expectations of sharp rupee depreciation. According to market participants, the improved outlook encouraged exporters to increase their hedging activity.

Importers Continue Currency Protection Strategy

Importers purchased FX protection worth nearly $74 billion in June, representing a 55% increase year-on-year and a 5% rise from May. Importers remained active despite the rupee's recovery from its recent lows.

Ongoing uncertainties related to crude oil prices and geopolitical developments continued to support hedging demand. The trend suggests that importers remain cautious about potential currency volatility in the months ahead.

Corporate Hedging Activity Reaches Record High

Combined exporter and importer hedging activity touched a record $120 billion in June, according to clearing house data. Corporate FX hedging has been trending higher since tensions in the Middle East escalated in late February.

Between March and June, average monthly hedging activity stood at $102.4 billion, compared with $74 billion during the corresponding period last year. The increase reflects elevated risk management efforts among businesses exposed to currency fluctuations.

Read More: RBI Enforces New Forex Derivative Norms to Support Rupee Stability.

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Conclusion

June witnessed record FX hedging activity among Indian corporates, led by a sharp rise in exporter participation. Exporters booked $46.3 billion worth of hedges as expectations of significant rupee depreciation receded following RBI measures to attract dollar inflows.

Importers also remained active, purchasing protection worth nearly $74 billion amid concerns over oil prices and global risks. The combined hedging volume of $120 billion underscores the growing focus on managing currency risks in an uncertain global environment.

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