Given frequent sharp movements in the US dollar-rupee rate, it looks as though currency futures are not going to be just another trading instrument; they’re likely to be very useful for many people in a variety of situations. Because of small lots, everyone can participate in this market.
Margins levied are even lower than for gold in commodity futures. Currency futures are the most liquid of markets. And the tick size (the minimum price movement in a market) announced is just a quarter of one paisa, which makes entry and exit easier for retail clients.
Importers and exporters use currency futures to hedge foreign currency exposure. Some of the business from the OTC (over-thecounter) market controlled by banks will be transferred to the currency futures markets.
Transparency and liquidity will ensure that companies with exposure of less than $5 million find the currency futures markets much friendlier. But what’s in it for you? Why should an ordinary investor be interested in currency futures?
