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Introduction Depository

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    What is currency trading?

  • While trade is international, currencies are national. As international transactions are settled in global currencies, usually they are brought/sold for one another and this constitutes 'currency trading'.
  • Are there any factors that affect the prices of currency?

  • Currency prices are typically affected by the supply and demand for the country's currency in the international foreign exchange market. The demand and supply dynamics is principally influenced by factors like interest rates, inflation, trade balance and economic & political scenarios in the country.
  • What is a currency futures contract?

  • A currency futures contract is a standardized version of a forward contract that is traded on a regulated exchange. It is an agreement to buy or sell a specified quantity of an underlying currency on a specified date in future at a specified rate.
  • Is there any need of currency futures?

  • Currency futures are needed if your business is influenced by fluctuations in currency exchange rates. For example if you are in India and are importing something, you have done the costing of your imports on the basis of a certain exchange rate between the Indian Rupee and the relevant foreign currency. By the time you actually import, the value of the Indian Rupee may have gonedown and you may lose out on your income in terms of Indian Rupees by paying higher. Currency futures help you hedge against these exchange rate risks.
  • Who can participate in a currency futures market?

  • Any resident Indian or company including Banks and financial institutions can participate in the futures market. However, at present, Foreign Institutional Investors (FIIs) and Non-Resident Indians (NRIs) are not permitted to participate in currency futures market.
  • What is the minimum trading unit (i.e. contract size) and tenure of the USDINR, EURINR, GBPINR and JPYINR futures contract?

  • The contract size of the USDINR futures contract is USD 1,000, EURINR future contract is EURO 1,000, GBPINR future contract is GBP 1,000 and JPYINR future contract is YEN 1,00,000. The contracts shall have a maximum maturity of twelve months. All monthly maturities from 1 to 12 months are available.
  • Does currency trading help small traders?

  • Yes. The minimum size of the USDINR futures contract is USD 1,000. Similarly EURINR future contract is EURO 1000, GBPINR future contract is GBP 1000 and JPYINR future contract is YEN 1,00,000. These contracts can buy or sell by paying 5 to 10% margin only.So by investing Rs.2000 one can buy 1000USD/1000EURO/1000POUND/100000YEN in his/her currency trading account.
  • What are the risks involved in currency futures market?

  • Risks in currency futures pertain to movements in the currency exchange rate. There is no rule of thumb to determine whether a currency rate will rise or fall or remain unchanged. A judgement on this will depend on the knowledge and understanding of the variables that affect currency rates.
  • Which are the global exchanges that provide trading in currency futures?

  • Internationally, exchanges such as Chicago Mercantile Exchange (CME), Johannesburg Stock Exchange, Euronext.liffe, BM&FBOVESPA and Tokyo Financial Exchange provide trading in currency futures. India to hedge and trade their Indian Rupee risk. Most international exchanges offer contracts denominated in other currencies.
  • What are the trading hours on MCX-SX?

  • Trading in currency futures is on all working days from Monday to Friday and is between 9.00 am to 5.00 pm.
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