Currency Future FAQ

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Q. What is Currency Futures?

A currency futures contract is a standardized form of a forward contract that is traded on an exchange. It's an agreement to buy or sell a specified quantity of an underlying currency on a specified date at a specified price. In India, currently four currency pairs are traded (USD/INR, EURO/INR, GBP/INR and JPY/INR) with a lot size of 1000 units of the base currency, except JPY where the lot size is 100,000. Settlement for the customer is, however, done in Rupee terms and not in the foreign currency.

Q. What is a futures contract on the INR/USD exchange rate?

It is exactly like a futures contract of Nifty or of Infosys. A futures price is traded on the screen. That pertains to the INR/USD exchange rate at a future date. If the spot price goes up, the futures buyer makes a profit at the expense of the

Q. Advantage of Currency Futures?

Transparent & Efficient price discovery.
Ease of trade.
No paperwork required at branch level unlike forward contracts.
Submitting proof of underlying is not a precondition.

Q. How do I start trading in Currency Futures?

Currency Futures can be bought and sold through the trading members of National Stock Exchange. To open an account with us you will be required to complete the KYC norms which include signing of member constituent agreement, constituent registration form and a risk disclosure document.We will allot you a unique client identification number. To begin trading, you will be required to deposit cash or collateral (Approved Equity shares) with us as may be stipulated. Send in an order to us exactly as you do in NSE Derivative / Future & Options to begin trading.

Q. What is the contract specification of USDINR futures contract?

Symbol USD/INR
Unit of trading 1 lot (1000 Dollars)
Hours to trade Monday to Friday (9:00 AM – 5:00 PM)
Trading Cycle 12 Calendar months
Final Settlement day Last working day of the month of delivery
Movement per Tick INR 0.0025
Last Trading day of month 2 working days prior to Last business day of the delivery month.
Settlement Daily - T+ 1
Final - T+2
Final Settlement Price RBI reference rate on the date of delivery of contract
Mode of Settlement Cash Settlement in INR

Q. What is the difference between long position and short position with reference to Currency Futures?

When one buys a Currency Futures, it is called 'long position' and when one sells a Currency Futures it is called 'short position'. It may be noted that open long or short positions taken in Currency Futures can be offset (squared off) by taking the opposite position, before the contract expiry date or hold till expiry and settle the contract at Final Settlement Rate (RBI Reference Rate).

Q. Is it possible to put a limit order and stop loss order?

Yes, it is possible to put a limit order and stop loss order. These orders will remain in the order book as open orders and once they are executed, they will become trades.

Q. Is it possible to modify or cancel unexecuted orders?

Unexecuted orders can be modified or cancelled. After an order is executed into a trade, it is not possible to change the order parameters or cancel the same.

Q. What is mark to market?

Marking to market of outstanding positions refers to the valuation of the outstanding long and short positions with the latest market price of the Currency Future Contract as compared to the value at which the open position has been taken. At the end of the trading session, all outstanding positions are repriced at the daily settlement price or closing price of that session.

Q. How is margin money collected?

Margin money is collected in various forms, such as:

  • Cash deposits.
  • Approved Securities : Equity shares (Approved securities are accepted with applicable haircuts).

Q. What is open interest?

Open interest refers to the outstanding long or short positions. For every long position taken, there is a short position created.

Q. Who can participate in trading in exchange-traded currency futures market in India?

Any resident Indian entity, including importers, exporters, SMEs, banks, and financial institutions can participate in the Futures Market. However, at present, Foreign Institutional Investors (Flls) and Non-Resident Indians (NRIs) are not permitted.