In India, NSE and BSE stock exchanges offer currency futures and options for regular investors (through their SEBI registered agents). The process takes currency pairs into consideration for the purpose of currency exchange. This however is allowed in limited pairs like the following –
- USD – INR
- GBP – USD
- EUR – USD
- USD – JPY
Undoubtedly, the USD -INR pair is the most liquid one in the market now. The other pairs are also rising in demand due to the dynamic business environment.
Structurally, the currency futures and options can be thought to operate in the same lines as the Equity and commodities trading market. However, here traders focus on trading in currency futures instead of derivatives.
How to do forex trading in India?
If you wish to proceed with the USD-INR pair, you can buy the US dollars when Rupee value strengthens. When the opposite happens, it is best to sale this stock and get maximum gains. In this article we explain How to do forex trading in India for both regular investors and companies.
How to do forex trading in India – Companies perspective
Currency futures can be used by the companies who can take the added risk associated with the process. The market is highly volatile and is prone to numerous factors.
Thus, if you are an importer with an amount receivable in the future, you can easily hedge the risk by investing into a USD-INR pair. This means that in case of currency exchange fluctuations, the loss on import payable will be adjusted by your equivalent profits gained through the earnings of currency futures.
How to do forex trading in India – Individual investors
If you are an individual investor and wish to understand about How to do forex trading in India, then you should seek out the help of a registered trading agency to guide you through the process.
Trading in the forex market is extremely tough and you need to be aware about the possible risks before making an investment. If you are a business owner, basic understanding of the process can be beneficial to save you from losses arising from the above fluctuations.
Key takeaways –
- You can hedge the currency risk and trade in currency futures
- The same is ideal for both regular and institutional investors
- The currency trading is still in nascent stages and is prone to risk
- Trading in the market has lower commission. So, it is better to move through a SEBI registered dealer for the right results