With currencies bouncing up and down, these are hardly great times to make a quick buck in the currency market.
But nothing can stop companies from trying out ways to improve earnings when a slowing economy is impacting their profitability.
Before the financial crisis of 2008, when the economy was booming and the rupee was on a stronger foot, banks managed to hardsell exotic forex products to many companies — small and big.
With currencies bouncing up and down, these are hardly great times to make a quick buck in the currency market. AFP
Many of them, who fell for the trap eyeing profits, burnt their fingers as they lost currency bets later when the rupee and dollar fluctuated violently in the aftermath of the crisis. Many even filed cases, alleging the banks did not disclose the risks attached to the products clearly.
An Economic Times report says such swap deals have returned to the market, though cautiously and as plain vanilla products.
“In the last few months, about 50 companies have entered into such derivative contracts. But this time, the documentation is stringent and all deals are authorised by the clients’ boards,” a senior banker is quoted as saying.
Read the report here.
