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All About Currency Trading In India

Sep 5th 2015 at 12:33 AM

There are different ways and methods through which you can start currency trading in India. Globally, currency trading has a huge turnover and the global market of currency trading is roughly estimated at 3 trillion dollars. The contribution of the Indian market in this global business is 400 billion dollars and the experts of the industry are stating that currency-trading exchange in India will be booming more to contribute in the global market.

Reasons of growth in the currency trading market in India

The growth in the Indian currency trading market was seen after RBI gave approval of intraday trading in exchange of foreign currency. In addition to this, implementation of policies related to market policies acted as a boost for currency trading practice in India. Along with this, a committee was formulated by RBI who looked and checked the Forex market on a global level so that strategies to strengthen the Indian currency exchange market can be channelized in the right direction. The currency trading exchange in India got an additional arm of currency features in the year 2008, which after implementation saw a series of change, and growth in the currency exchange market. The transactions of foreign currency exchange happen 24 hours in a day across all zones.

How the currency exchange market in India works

The currency-trading exchange in India happens in three ways, which are mainly, futures market, forwards market and spot market. When the currencies are bought and sold at the current rate of the market, it is termed as spot market. Exchanges and contracts happening over the counter for currency exchange are termed as forward market. While trading at forward market, the terms and conditions are designed by the parties themselves. When purchasing and selling of contracts for a future date, it is termed as future market. An estimated value is decided of the foreign exchange after which the contracts are purchased.

Advantages of currency-trading exchange in India

Listed below are the advantages that is derived by currency exchange trading in India

Hedging: With hedging, you can reduce the risks of movements in price of an asset. You can easily hedge the potential loss and protect your foreign exchange with ease.

Leverage: The advantage of leverage in currency exchange market in India gives users the opportunity to use different tools of finance to share the risk of investment.

Arbitrage: Foreign exchange currency in Indian market gives the advantage of arbitrage, which means purchasing, and selling of security in different markets at the same time.

Style of trade: As currency exchange trading happening online, transparency is maintained in the best possible manner. It gives users the ease of keeping a check on the transactions and starting the process of selling and purchasing.

Additional Information related to currency trading

In India, currency trading is termed as currency derivates trading where trading of foreign exchange are done in pairs. These pairs are INR-USD, INR-GBP, INR-JPY and INR-EUR. The complete process of trading is regulated and controlled by SEBI (Stock Exchange Board of India) and only residents of India and participate in derivates trading which is held at MCX SX, BSE and NSE.

Author Resource:- The Author is a professional writer, presently writing currency hedging strategies.

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