Currency Trading

A currency future, also known as FX future, is a futures contract to exchange one currency for another at a specified date in the future at a price (exchange rate) that is fixed on the purchase date. On NSE the price of a future contract is in terms of INR per unit of other currency e.g. US Dollars. Currency future contracts allow investors to hedge against foreign exchange risk. Currency Derivatives are available on four currency pairs viz. US Dollars (USD), Euro (EUR), Great Britain Pound (GBP) and Japanese Yen (JPY). Currency options are currently available on US Dollars.

Introduction of Currency Futures in India

The introduction of trading in currency Futures effective August 29, 2008, on National Stock Exchange, was a major milestone in the Indian financial market evolution. Subsequently, Reserve Bank of India (RBI) and Securities and Exchange Board of India (SEBI) permitted trading in USD INR currency futures in other stock exchanges, albeit with some control. Currency futures in India are cash settled and not physically settled that means that they are settled without the actual delivery of the currency on expiry.

Currency futures allows investors to buy or sell a currency at a future date at a previously fixed price. Trading of this instrument at stock exchanges has facilitated an additional avenue and greater flexibility to investors and corporates in India to hedge their foreign currency exposure. It also ensures more transparency in dealing.

Currency Derivatives trading at Stock Exchanges being at a nascent stage, the lot size has been pegged at 1000 units of the overseas currencies in case of USD, EUR & GBP and 100,000 in the case of JPY, with a maximum tenor of 12 months. Further, it is mandatory to settle these contracts in local currency i.e. in Indian Rupee. FII and NRI cannot participate directly in this trading. However, once the market reaches a level of maturity and can withstand the pressures of volatility, one can expect withdrawal of these restrictions.

Some Details To Know

Symbol

USDINR

EURINR

GBPINR

JPYINR

Market Type

N

N

N

N

Instrument Type

FUTCUR

FUTCUR

FUTCUR

FUTCUR

Unit of trading

1 - 1 unit denotes 1000 USD.

1 - 1 unit denotes 1000 EURO.

1 - 1 unit denotes 1000 POUND STERLING.

1 - 1 unit denotes 100000 JAPANESE YEN.

Underlying / Order Quotation

The exchange rate in Indian Rupees for US Dollars

The exchange rate in Indian Rupees for Euro.

The exchange rate in Indian Rupees for Pound Sterling.

The exchange rate in Indian Rupees for 100 Japanese Yen.

Tick size

0.25 paise  or INR 0.0025

Trading hours

Monday to Friday 
9:00 a.m. to 5:00 p.m.

Contract trading cycle

12 month trading cycle.

Last trading day

Two working days prior to the last business day of the expiry month at 12:30 pm.

Final settlement day

Last working day (excluding Saturdays) of the expiry month.
The last working day will be the same as that for Interbank Settlements in Mumbai.

Quantity Freeze

10,001 or greater

Base price

Theoretical price on the 1st day of the contract.
On all other days, DSP of the contract.

Theoretical price on the 1st day of the contract.
On all other days, DSP of the contract.

Theoretical price on the 1st day of the contract.
On all other days, DSP of the contract.

Theoretical price on the 1st day of the contract.
On all other days, DSP of the contract.

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