Currency Derivatives

Currency derivatives are financial contracts whose value is derived from the exchange rate between two currencies. They allow businesses, investors, and traders to hedge against or speculate on currency movements. In India, currency derivatives are traded on NSE, BSE, and MCX-SX, with the most actively traded contracts being USD/INR, EUR/INR, GBP/INR, and JPY/INR futures and options. The RBI and SEBI jointly regulate currency derivatives in India. Corporates with import or export exposure — such as IT companies with USD revenues or oil importers with USD payables — use currency derivatives to lock in exchange rates and reduce P&L uncertainty. Retail participants and traders also use USD/INR futures for speculation and short-term hedging. The contract size for USD/INR futures on NSE is USD 1,000, making them accessible to a wide range of market participants.