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Currency Future a useful tool for forex risk

Created by : P.R.Subramaniam , CFO, Imexforex Services  | 08 28 2009 06:26:16 +0000
Industry : BankingFunctional Area : Global Business(Strategy & Execution)
Keywords : forex currency future
Activity:  477 views;  last activity : 10 06 2010 10:19:07 +0000

Currency Futures is a new forex risk management instrument. This product is generally  useful to :
    companies having forex exposures
    exporter/importers
    getting or making remittance in foxex
 However the product and its features have not reached the end users. Don't you think the product is good for enough

  
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I think Forex futures is one of the better tool to hedge the forex risk for the companies who have an exposure to foreign exchange either because of export or import operations or parent - branch opertions. As these days Indian export as well as imports are booming with huge volume so it is risky for the companies to keep an huge open position which can result into huge losses. So forex futures is a better hedging tool where you can book your profits even before your receivables has arrived.

But right now only INR and US$ futures are only traded on Indian board. As Indian currency is still not fully convertible currency as US $ and other renowned currencies. Once it gets fully convertible currency and worldwide acceptable currency, the forex futures with other currency would also start trading and then it would help those companies even who have an exposure in foreign exchange other than US $ currency.
By Darshil , CEO/MD/Director, Darshil Cotton Company  08 28 2009 07:44:37 +0000
 
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By Vaibhav Rastogi, Director, A2Z Forex  | 10 06 2010 10:19:07 +0000
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Currency futures can be used effectively for both hedging and speculation. For hedging purpose we can lock in an exchange rate for the future transaction. Disadvantage, you can’t gain from a favorable movement. It can be used to benefit from any arbitrage opportunities.
By Padmanabhan R, Articled / Audit assistant, Finance student  | 08 28 2009 17:31:50 +0000
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Yes i agree that the Currency Futures are a good tool for risk management, but many are also using it for speculative purpose.

The companies having forex exposure do not have much tools to minimize the risk, they follow the traditional methods of natural hedging , the curency futures is gaining popularity and hope will develop as a very effective tool as risk management in FOREX.

Also we only have INR USD market, now with the Interest Rate Futures starting the market is also growing giving opportunities to trade and also create awareness..
By Japan Shah, H.O.D, Oxford School of Management  | 08 28 2009 10:38:32 +0000
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I believe the forex market is opening up with new risk management products. At present it is IRS vis USD. Once this becomes popular, we can have other currencies as well.
By P.R.Subramaniam , CFO, Imexforex Services  | 08 28 2009 06:26:16 +0000
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