Currency Derivative Trading
Another important segment is currency derivative. The exchange rates keep fluctuating on daily basis and it also effects the stock markets as much as the export and import bills of importers and exporters. With FII’s holding a large chunk of equity in our markets their portfolio values in dollar terms also gets effected with any substantial change in foreign currency rates.
Hence Currency derivatives are an important hedging tool for all those who are involved in imports or exports and FIIs One can buy or sell currency under future contracts which are available for one to three months.
The margin system and payment of mark to market loss/profits are on daily basis and is similar to the Equity derivative segment.