As the old adage goes “don’t put all your eggs in one basket”. Diversification into various asset classes is important when it comes to investment. With the global economies getting closely interconnected through financial markets, also currency fluctuation reflecting both trade and underlying strength of the economy, currency trading has evolved to be a mature financial investment avenue for Indian investors. Exchanges offer USD, Euro, GBP and Yen (all against Rupee) to trade between 9 am to 5 pm.
Cross currency pairs like EURUSD, USDJPY, GBPUSD are also set to be launched Shorty on the Indian currency bourses.
Launched in 2008, currency derivative market has steadily grown in volume and serves as platform for both hedging and speculation. Currency derivative is the way that resident investors explore this exciting world of foreign exchange.
What makes this proposition interesting? Like in equity derivatives, currencies too are cash settled (no delivery) on a daily basis. This makes it.
Our step by step guide will help you through understanding the basics
Before you invest for the first time it is important to understand the basics. We’ve put together a step-by-step guide to investments that we hope will clarify some of the broader benefits and risks.
Yes, same margin can be used to trade in both Equity and Currency segment.
All Currency contracts – Futures and Options on NSE are cash-settled.
In NSE for Currency Derivatives the trade timings are as follows: Trading Session- Monday to Friday- 9:00 AM to 5:00 PM
Revise Timing will be: Monday to Friday- 9:00 AM to 7:30 PM
All Currency contracts expire two working days prior to the last business day of the expiry month at 12:30PM.
Following are the participants in Currency Trading:
All currency futures & options contracts on exchange are net settled in cash in Indian Rupee. The final settlement price is the RBI Reference rate for each currency pair published on the last trading day for the expiry month.
2% to 5% (of Contract Value)
The size of each contract for different currency pairs on the exchange are as follows:
|Currency Pair||Contract Size|
|EURUSD (Cross-Currency Pair)||EUR 1000|
|GBPUSD (Cross-Currency Pair)||GBP 1000|
|USDJPY (Cross-Currency Pair)||USD 1000|
All Resident Indians as defined in section 2(v) of the Foreign Exchange Management Act, 1999 (FEMA, Act 42 of 1999) are eligible to trade in the Currency Derivatives segment. For participation by regulated entities, concurrence from respective regulators should be obtained. Currently, trading facility in Currency Derivatives at I-Sec will be offered to all Resident Individuals / HUFs / eligible Corporate fulfilling the FEMA criteria.
Currency Derivatives are Future and Options contracts which you can buy or sell specific quantity of a particular currency pair at a future date. It is similar to the Stock Futures and Options but the underlying happens to be currency pair (i.e. USDINR, EURINR, JPYINR OR GBPINR) instead of Stocks. A future contract of USDINR of expiry 27th Jan, 2016 will be represented by symbol ‘FUTCUR-USDINR-27JAN2016’. A call option contract of USDINR of expiry 27th Jan, 2016 for Strike Price ‘66’ will be represented by symbol ‘OPTCUR-USDINR-27JAN2016-66-CE’.
Currency is the world’s largest market. Daily currency fluctuations define the dynamics & strength of economies around the world. Currency derivative market has steadily grown in volume and serves as platform for both hedging and speculation. Currency derivative is the way that resident investors explore this exciting world of foreign exchange. Currencies are cash settled (no delivery) on a daily basis.
Our experienced personnel advise you on strategies and timing of currency investments. We at GEPL invest time in research – both macro and micro to generate accurate conclusions. Our strong and dedicated fundamental and technical teams are well poised to advise customers on currency trading / investments. We also publish currency derivative strategy on a periodic basis, based on our research. We have an excellent track record.
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