Awareness and Use of Various Hedging Tools by IT Sector Undertakings in Pune for Effectively Managing the Foreign Exchange Risk

Abstract

Financial markets across the globe have been in turmoil with currency markets displaying high degree of volatility. The Indian Rupee has witnessed sharp depreciation and increased volatility during the recent past, driven by both global and domestic factors. The event began Post 2008 financial crisis, the advanced economies slipped into recession and faced prolonged slowdown in their growth. Sovereign Debt crisis of Euro Zone countries, which subsequently followed, also hampered the world growth. After the historic downgrade of USA by S&P in August 2011 that triggered heightened risk aversion and a selloff of assets in emerging economies including India by the Foreign Institutional Investors (FIIs). Risk aversion was further heightened on escalating euro-zone concerns, falling global growth and recent apprehensions over the US Federal Reserve tapering its bond purchase programme. While authorities across the globe have taken actions to stabilize the markets and support growth, India has grappled with unique domestic considerations.