What are currency derivatives, and how to trade them on Kite?
Currency derivatives are F&O contracts traded on exchanges, similar to stock F&O. However, the underlying assets of these contracts are currency pairs such as USDINR, EURINR, JPYINR, or GBPINR, rather than stocks. To learn more about F&O, see What is F&O (Futures and Options)?
The lot size in currency contracts on the National Stock Exchange of India (NSE) represents the standardized quantity of currency units that can be traded within a single contract. It signifies the minimum amount of a specific currency eligible for trading in a single transaction. The contract specification of the Currency contracts can be found on the NSE website (WEB).
The lot size for these currency pairs is as follows:
|USDINR||1 unit denotes 1000 $ (Dollar)|
|EURINR||1 unit denotes 1000 € (Euro)|
|GBPINR||1 unit denotes 1000 £ (Pound sterling)|
|JPYINR||1 unit denotes 100,000 ¥ (Yen)|
- Suppose we take the USD-INR currency pair with a lot size of 1,000.
- To buy or sell USD-INR contracts, traders must transact in multiples of 1,000 units.
- If a trader buys one lot, they would be purchasing 1,000 units of the U.S. Dollar against the Indian Rupee.
Likewise, if a trader sells one lot, they would be selling 1,000 units of the U.S. Dollar against the Indian Rupee.
To learn more, visit zerodha.com/varsity/chapter/the-usd-inr-pair.
The currency derivatives segment of NSE provides trading for these instruments:
- Currency F&O on 4 currency pairs.
- Cross currency F&O on 3 currency pairs.
- Interest rate F&O on Government Securities (G-Secs).
- 91-Day Treasury-Bills(T-bills).
- Overnight MIBOR (ONMIBOR).
Currency F&O can be traded by adding them to the marketwatch on Kite. To add these contracts, type out the name of the currency pair in the universal search on Kite, and all the contracts will be displayed in the drop-down.
Hover over the contract to be traded and click or tap on
to place an order.
Did you know?
- Intraday (MIS) is allowed for currency futures, whereas it's not allowed for currency option contracts.
- Currency derivative contracts are settled at the RBI reference rate.