Yes puneet, awareness, training & education is must for investors cum traders. Nse & MCX has already started certification program in this regard. One more thing it is also important for exporters & big business houses to build up hedging position easily. Because the time value has major impact in the form of currency value between quotation(order) & sale(execution). Many business houses already using the techniques whereas others are in start up mode....... Govt can educate them about currency hedging system...
By
Vipin Bhasin, Private Equity/Hedge Fund/VC-Manager, Indian Investment Co.
| 06 16 2010 17:55:27 +0000
Puneet currency segment is different from equity. FIIs can't able to build more difference in the value of dollars or Euros etc. Because If you are talking about Indian stock market then we haven't much investment as retail investors. More dependency on big players, DIIs or FIIs. It is the major reason that FIIs are the major players of market. They have capacity to change the flow of market(manipulate). But currency belongs to countries economy, not only with India but also with developed countries. So it is not easy to manipulate the currency segment or you can say exchange rate. And in stock market we don't have enough domestic fundamentals. That is why global crisis are more effective in Indian market. But we have strong economy so that value of currency is less effective. And FIIs are not able to make more impact on currency through futures tradings....
By
Vipin Bhasin, Private Equity/Hedge Fund/VC-Manager, Indian Investment Co.
| 06 16 2010 17:01:17 +0000
Puneet your question is right. But market believe in volatility. These days we can see the increasing trend of volatility in currency futures. And due to this retail investors also showing their interest to trade in currency segments. But in starting 2008, we are not interested to trade in this segment. Increasing knowledge about currency is not the main reason for same but trend will lead/compel us to trade. If you are worry about the knowledge of FIIs than Indian investors then i can't think so that Indians will learn without competition or happenings...... How many people have proper knowledge about investment in stock market although many years have already passed... But currency segment is good for exporter or big business houses for hedging the order amount with fluctuation of currency. FIIs entry will be good for them... In short, Investment or trading without self analysis always lead to losses. Don't invest blindly in any segment....
By
Vipin Bhasin, Private Equity/Hedge Fund/VC-Manager, Indian Investment Co.
| 06 15 2010 16:54:28 +0000
Yes huge investments are being done by FII in Indian companies. The main reason is we produce goods and provide services at a low cost. So I am sure this will increase the currency value.....
By
Sonali Sarkar, Trading Advisor, American Express
| 06 15 2010 12:12:45 +0000
Allowing FIIs in currency futures will take the country closer to free convertibility of the currency. That being our genuine aspiration, the issue is about the timing. In the back of so much of uncertainty on global economic prospects and the pressure building on the emerging economies, will it be the right time to move in this direction at this juncture particularly when the currencies of several emerging markets in themselves are experiencing intense volatility.
By
Puneet Gupta, Executive Planning, Alpla India Pvt. Ltd
| 06 14 2010 15:19:55 +0000
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Dear Vipin ,,, Last concern, In this background it would be desirable if the currency futures segment is made to attract more of domestic players in the short term, say in the next two to three years and the markets are given access to more products such as cross or straight currency derivatives to enable them bring in diversified risks denoting each of the currency areas. A simple dipstick to check the preparedness of the currency markets to face the FII segment would be the percent of the derivatve volume to the total of the OTC volumes. For example, derivative reach to half of the OTC volumes would crudely indicate that the markets are in a state to welcome FIIs as it is with the current OTC volumes. To develop volumes to half the level of OTC, it would need role out of a road map essentially focussed on the domestic players. In this regard, it becomes imperative for the government, regulation and exchanges to take larger responsibility in creating awareness, conducting training and education, strengthening skill sets and certification in currency futures. Exchanges such as MCX-SX are already active through various possible media in this regard. In the globalizing economy, it is essential that this market with wider implication for connecting the domestic stakeholders with the global markets should be strengthened to withstand global effects which would be passed on through FII participation. A strong and resilient domestic market can always act as the shock absorber for the entire economy at times of financial crisis as like the one now and make the globalization process seamles
By
Puneet Gupta, Executive Planning, Alpla India Pvt. Ltd
| 06 16 2010 17:16:36 +0000
dear vipin ,,,, another concern.... Lessons from domestic stock markets indicate that FII participation has the potential to make this segment more speculative and volatile. Rupee being the currency of a major economy such as India, contrarian views on its current strength and position could lead to wide swings in currency rates affecting trade balance. With FIIs participation picking up greater momentum without the development of the domestic market in an asset class like rupee would make markets sway more the global speculation with little weight to domestic fundamentals and make the economy vulnerable to such global financial meltdowns as the recent one
By
Puneet Gupta, Executive Planning, Alpla India Pvt. Ltd
| 06 16 2010 16:08:54 +0000
Our people do not even understand the concepts behind currency futures leave alone the expertise in dealing with currency futures. The ultimate beneficiaries will be the foreigners. Let us first stabilise the existing stock exchanges and make it free and fair and then think of these futures, swaps, derivatives, et.
By
Raju V P, Senior Manager, an International Bank
| 06 15 2010 15:19:31 +0000
dear vipin , i have some other concers also ,,,pls clear .... ...It is important that in such an important segment such as currency futures, the strength of the domestic players should be enough to show the real strength of our economy. FIIs with opportunity for trading in domestic and global exchanges where as the domestic market intermediaries have access only to local markets thus pose the problem of unequal level playing field. On the other hand, FIIs with larger stake, reach and access to global exchanges have the potential to sway the market in particular directions more suitable to them than to be of any relevance to the real economy. Thus, it is important that some space be given for the domestic players to understand the market and grasp it with more confidence before we allow the floor for FIIs.
By
Puneet Gupta, Executive Planning, Alpla India Pvt. Ltd
| 06 15 2010 14:34:37 +0000
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