Forien exchange exposer management; IFFCO

Abstract

This project was taken up with the aim of reducing IFFCO's liability with regard to its foreign currency loans caused by fluctuations in exchange rates and floating interest rates. Thus IFFCO's current foreign currency loans were anaiysed for various options available, namely: * Interest Rate Swaps, * Interest Rate Caps, * Forward Cover and * Currency Options.

On the basis of the analysis the following recommendations were made: * Going in for a 2 year Interest Rate Swap agreement for both the Tranches of the bankers Trust Asia loan. * Arranging for a Forward Cover for interest payments and principal repayments of both the Tranches of the bankers Trust Asia loan. Of these recommendations’ efforts are already being made to set into motion the various modalities to obtain a Forward Cover. It is also hoped that this report and the software preparade will be useful to IFFCO in the future.