Currency futures posts record volumes

The domestic exchange traded currency futures on Wednesday witnessed the highest turnover since its launch last year. The combined turnover on the MCX Stock Exchange (MCX-SX) and the National Stock Exchange (NSE), the two exchanges where currency futures are traded, was a record Rs 29,194 crore.

On MCX-SX, the turnover was Rs 14,790.86 crore, while on NSE the volume was Rs 14,404.12 crore. There is an intense competition between the exchanges to corner higher market share. Over 3.2 million currency futures contracts were traded on MCX-SX, while 3.1 million contracts were traded on NSE. The combined open interest position on both the exchanges stood at over one million contracts.

Although the size of trades has not been quite significant here, as compared to the volumes traded in developed countries, punters have been placing their bets in the segment due to signs of economic recovery.

The rupee has been constantly rising against the dollar since March 2009 on back of heavy flow of investments into the country. Foreign institutional investors (FIIs) have invested over $15 billion in the domestic equity market in 2009, beating the inflows of over $14 billion in stocks registered in 2007.

The domestic currency futures market, however, is still in a nascent stage, as it started only last year. Major trades in the currency futures are done in the unregulated non-deliverable forwards market run by a few top banks from Singapore. In India, no foreign fund or institution can take position in the segment.