By Vipin Agnihotri
Lucknow, India: It has come into the notice of The India Street that for the first time in the history, the Indian rupee is going to be traded in the futures market. According to sources, trading is scheduled to start on June 7 on the Dubai Gold and Commodity Exchange (DGCX).
It is worth mentioning in this regard that while DGCX chairman Colin Griffith announced the launch of the world's very first Indian Rupee currency contract, some of the dealers in India have expressed apprehension to The India Street that the move might enhance volatility in the currency.
The pivotal factor here is that, as the transaction will take place in Dubai, Reserve Bank of India cannot do anything. Apart from that, there would not be any settlement in Indian rupee in the transaction. “RBI was unable to object to the move though it could affect the rupee's market value,” pointed out M Subri, a senior Forex dealer.At the present juncture, rupee trades in non-deliverable forward market in Singapore, Hong Kong and Dubai and what’s more only big players participate. “While Rupee will be the underlying currency on DGCX, the transaction will be in dollar terms and trading will be open to everyone,” pointed out Rahul Bhandari, noted Indian economist.
Now, as Reserve Bank of India has allowed an individual to remit $100,000 a year overseas, a requirement is being felt for an international futures market. The interesting aspect in the whole issue is that the value of rupee in the global futures market identical to DGCX would be influenced by its value in the domestic market. In the domestic forward market, a transaction is settled with the physical exchange of rupee.According to experts, at DGCX, each Indian rupee contract would represent Rs 20 lakh. Prices will be quoted in US cents per Rs 100, with a minimum price fluctuation of $ 0.000001 per rupee. Furthermore, at any point in time DGCX will list the trading price for the present and next two calendar months, in addition to the next three calendar quarterly months.
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Author : prem Kumar (IP: 61.12.11.106 , static-106-11-12-61-primus-india.net)
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Comment:
The trading of Indian rupees in a foreign exchange is a dengerous proposition even though the benefits are also obvious.The regulatory control will still be in the hands of RBI though other players might be influencing the rupees movement.
But is DGCX has to be blamed for this.Or the blame is much to the RBI which is still struggling its baseless and obsolate mnetary policies.RBI is still unable to come up with a proper and efficient monatory policy that account all the new developments and facts of new era.
One benefit of this trading can go to our export-import community.
This can also nullify the ill-effects of recent rises in the currency prices.
Though ,it should have been better if RBI had introduced currency fututr in India exchanges and taken initiatives in this regard.
I believe RBI can still take that initiative to launch curreny contracts in our homeland with stringent regulatory mechanisms
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