The Bank's Basel III CET1 ratio is a strong one despite the significant impact of Forex translation losses
and the cost of carry of the IRS cash flow hedge.
The result includes an amount of INR 1,315 million or (US $ 22 million) on account of foreign exchange translation losses
3 percent in foreign exchange translation losses
, while acquisition growth added 5.
Adjusting for translation losses
, total loan volumes decreased approximately 2.
The bank recorded foreign exchange translation losses
in the third quarter of $1.
Additionally, analysts now believe that regional central banks will be less inclined to revalue currencies as they will incur huge translation losses
on the large pool of dollar denominated assets they hold when the dollar is poised for a recovery.
A larger revaluation would be counter productive, as it would impair budgetary balances and current account surpluses, in addition to translation losses
on the large pool of dollar denominated assets that oil revenues have created, he argued Additionally a move to a free float would not be advisable at this time as the region lacks a well developed debt market that helps transmit interest rate signals, an important pre-requisite for monetary policy to function effectively in a floating exchange rate regime.
Bryan D'Aguiar, Head of Equity Research of NCB Capital said, "Any move towards a change of the peg to the US Dollar needs to be conducted in a transparent manner, with the components and weights publicly disclosed, in order to avoid speculative pressures"A larger revaluation would be counter-productive, as it would impair budgetary balances and current account surpluses, in addition to translation losses
on the large pool of dollar denominated assets that oil revenues have bought into.
In a trading update yester-day the group said strong earnings growth in the US, as profit from sales made last year flowed through, was offset by lower profits in share-oriented businesses and the currency translation losses
in its South African banking arm Nedcor.
Without some kind of hedge on foreign investments, you risk giving back in currency translation losses
all you gain from success in foreign markets.
A company with exposed assets in excess of exposed liabilities in a foreign country is susceptible to translation losses
from declines in value of the foreign currency between two fiscal periods.
Results including the Westinghouse segment, which include non-operating, non-cash foreign exchange translation losses
, were a net loss of $20.