Gold hedging on MCX rises to beat rupee swings
Commodity Summary MCX
Talking to ET, Surendra Mehta, national secretary, India Bullion & Jewellers Association, said, “The broadening base of hedgers is reflected in their open interest which is at a 2-year record high of around 15 tonnes. This is the result of increased participation by physical hedgers across the value chain, including government nominated agencies, bullion importers, refiners, primary producers, bullion traders and jewellers.”
Gold trade analysts said the acceptability of gold contract without commodity transaction tax impact is an indication that the bullion market is maturing.
“Traders are hedging their gold stock resulting in open interest going up on MCX. Gold has slowly started generating interest among investors as prices are shooting up due to the free fall of the rupee. The announcement of elections in five states will only add to the volatility in the market, which is bogged down by a falling rupee, rising crude oil prices and liquidity crunch. Therefore, hedging is the only way out in this scenario,” said Haresh Acharya, a leading bullion importer and secretary of Bullion Federation of India.
Acharya said during July-September, India imported around 200 tonnes of gold. “Import of gold has not yet picked up as there is enough gold in the system. Gold is now available at a discount of $4 per ounce in the B2B market,” he said.
Ever since RBI mandated that Indian entities with exposure to gold must hedge their exposure domestically, the existing liquidity and market depth of MCX has facilitated hedging. MCX has observed deliveries of more than 105 tonnes of gold and over 3000 tonnes of silver till date since inception. “MCX conducts awareness programmes for the entire bullion value chain with emphasis on risk management practices. Over the past year and half, over 150 such programmes covering 20,000 bullion traders/jewellers were held, including with apex industry associations,” said Shivanshu Mehta, head (bullion), MCX.