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One of the largest investment markets, trading different currencies involves participation from around the world. It provides you a window to trade the currency pairs for 5 days a week for 24 hours. With the increasing amount of trader’s interest around the world, currency trading has become the most liquid financial markets. Throwing light on one of the main reasons for this kind of attraction towards the currency market is- one it is traded across all major markets and second there is seemless flow of information across. The adaptation of technology has also enabled the trading experience with no centralized exchange even more transparent.
While understanding the dynamics of currency trading in India, they are traded in future lots and settled in cash. There are four famous currency pairs traded in India which are as follows USD-INR, GBP-INR, and INR-JPY. To trade the pair currency, one is called the base currency while the other is referred to as the quotation currency. Any trader looking for currency trading should open their accounts with the brokers who trade on exchanges like NSE and BSE.
The currencies are traded via derivatives instruments in the Indian market and are cash-settled. By cash-settled, it means that there is no actual exchange or delivery of currencies on the expiry day. Such an instrument is traded easily by the market participants, like corporates, retailers, or even speculators. The derivate products provide a transparent mechanism with a lesser possibility of any information or insider trading. In India, exchange-traded currency futures are mostly traded. By definition, futures contracts are an agreement to buy or sell the underlying currency on the future date at a specified rate.
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