Basics of dollar -rupee futures

What are dollar-rupee futures?

A dollar-rupee futures contract allows you to buy or sell the dollar (against the rupee) at a predetermined price for delivery on a future date.

Where can I trade in dollar-rupee futures?

You can on exchanges like NSE, BSE and MSE through brokers with whom you open a trading account. The settlement is in rupees and the expiry of contracts happens two working days prior to the last business day of a month. So the March expiry is on March 27.

How does it work?

Assume you’re bullish the dollar (bearish rupee), you buy the March expiry contract at 69. The size of the contract is 1,000 USD. Assume by March 27, dollar trades at 69.5, you make a gain of 0.5x1,000 or Rs 500. If, however, the dollar slips to 68.5, you lose Rs 500. Now, assume you’re bearish the dollar, you sell the dollar rupee futures contract at 69. If it expires at 69.50 you lose Rs 500, but if it falls to 68.50, you gain Rs 500. You put up a margin to trade, which is 3-5 per cent of the contract value. In the aforesaid cases, the size of one lot is Rs 69,000.

What is the maximum exposure a client can take?

$ 10 million or 6 per cent of the total open interest, whichever is higher.

At what rate does the settlement happen?

At the RBI reference rate.

What are the trade timings?

Monday through Friday, between 9 am and 5 pm.

Where are the most liquid contracts traded?

On NSE and BSE.