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GROWTH OF CURRENCY FUTURES IN INDIA

Currency Future - Meaning

A currency future is a futures contract to exchange one currency for another at a specified future date at a predetermined price (exchange rate). Investors use these futures contracts to hedge against foreign exchange risk.

• Objectives of the Study

• To analyse the growth of the Currency futures in India

• To study the recent trends in Currency futures in India

• Methodology of the study

• The study is analytical in nature and purely based on secondary data. The data were obtained from websites of various government agencies i.e. from SEBI, RBI, NSE.BSE, MCX-SX etc...

Results and Discussions

• To analyse the growth of the Currency futures in India

The growth of the currency futures in India has been assessed by measuring the growth in two variables which are open interest and contracts traded.

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Open Interest

• Open Interest is the total number of outstanding contracts that are held by market participants at the end of the day.

• Increasing open interest means that new money is flowing into the marketplace.

• Declining open interest means that the market is liquidating and implies that the prevailing price trend is coming to an end.

Business growth in currency derivative segment (NSE)

Year No of Trading days

Open Interest at the end

No. of Contracts

Turnover(Rupee Crores)

2008-09 139 2,57,554 1,313

2009-10 240 4,27,873 1,964

2010-11 249 30,20,562 13,690

2011-12 240 29,59,055 15,328

2012-13 243 36,57,304 20,101

2013-14 207 11,30,108 7,385

Source: SEBI Bulletin

Business growth in currency derivative segment (MCX- SX)

Year No of Trading days

Open Interest at the end

No. of Contracts

Turnover(Rupee Crores)

2009-10 240 4,23,314 1,951

2010-11 249 7,94,788 3,706

2011-12 240 8,44,086 4,494

2012-13 243 13,34,662 7,3892013-14 207 3,99,885 2,646

Source: SEBI Bulletin

Contract Traded

• The number of contracts traded on a stock exchange shows the total volume of contracts traded. An increase in the number of contracts traded on a stock exchange expresses the growth of trade in that particular stock exchange for currency future.

Business growth in currency derivative segment (NSE)

Year No. of trading days

Currency Futures

No. of Contracts

Turnover ( Rupee Crores)

2008-09 139 3,27,38,566 1,62,563

2009-10 240 37,86,06,983 17,82,608

2010-11 249 71,21,81,928 32,79,002

2011-12 240 70,13,71,974 33,78,489

2012-13 243 68,41,59,263 37,65,105

2013-14 207 43,53,92,323 26,62,902

Source: SEBI Bulletin

Business growth in currency derivative segment (MCX- SX)

Year No. of trading days

Currency Futures

No. of Contracts

Turnover ( Rupee Crores)

2009-10 240 40,81,66,278 19,44,654

2010-11 249 90,31,85,639 41,94,017

2011-12 240 77,03,25,229 37,32,446

2012-13 243 56,11,48,090 31,05,036

2013-14 207 32,35,41,637 19,72,257

Source: SEBI Bulletin

RECENT TRENDS IN CURRENCY FUTURES

Trends of currency Derivatives at NSE, MCX- SX, USE and BSE (Rupee Crores)

"By far the most significant event in finance during the past decade has been the extraordinary development and expansion of financial derivatives."

Alan Greenspan (Former Chairman, Board of Governors of the US Federal system)

Conclusions

• The Indian Currency future market has been witnessing so many changes since its inception in 2008.The currency derivatives segment on the NSE and MCX has witnessed consistent growth both in traded value and open interest since 2012-13. Currency futures are permitted in US Dollar- Indian Rupee, Euro- Indian Rupee, Japanese Yen Indian Rupee , Greater Britain Pound (GBP) Indian Rupee. Lot of fluctuations were witnessed during last financial year especially due to rupee devaluation. Currency future market shows lot of downward trend during same financial year. Hence the market cannot show its potential, any way we can expect lot of changes in the currency future market either by the introduction new currency pairs or something else by the new government.

Prepared By

Mr. Santhosh T R, Syamlal T L

Research Scholars

St.Peter's College Kolenchery

Ernakulum, Kerala

In Association With

Dr Reji M.A

Associate Professor & Research Guide

St.Peter's College Kolenchery

Ernakulam, Kerala.

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