Cash losses in hedging activities and even cash outflows on account of payment of Option Premia are strictly not allowed in many companies. The underlying assumption seems to be that the Treasury cannot be allowed to spend or lose money. Treasury is, at best, viewed as an extension of the Accounting function. Both Production and Marketing have their stipulated Cost Budgets, Losses and Wastage Budgets. And even thereafter, it is not inconceivable for even such plans and budgets to go haywire.
Money is a vital factor of production and needs to be properly and professionally managed.
And the fact of the matter is that today the Money Markets move like any other market does. Indian companies cannot afford to behave like ostriches as regards Treasury operations anymore. Major Currencies Euro can see 1.03 but not immediately We look at the Deutschemark charts for a long-term view. 1.90 on D-Mark translates into a level of 1.03 on Euro . That said, the Euro is unlikely to move up immediately.