NSE to Introduce Weekly Futures for USD-INR

NSE has introduced weekly futures for USD-INR currency pairs. Trading in these futures will start from 11 October 2021. It’s a part of this bourse’s plan to develop many derivatives for trading and provide players with hedging options. Coming up is a rundown of the entire story.

Key Highlights from NSE’s Announcement to Trade-In Weekly Futures

• National Stock Exchange introduced a USD-INR weekly futures instrument to complement the already existing weekly options.
• Weekly futures will expire on the following Friday at 12:30 pm.
• Eleven serial weekly futures will be available for trading except on the expiry week of a monthly contract.
• Moreover, the size of this contract will be USD 1000.
• It will be available for trading in the currency derivatives of the Exchange.

Earlier, NSE had introduced weekly options for a USD-INR pair around 3 December 2018. There are several explanations to rationalise this move. A few expositions are as follows:

• Traders will now have a low cost transacting instrument.
• Moreover, they can take advantage of the short-term market movements because of government policies, international news, etc.
• They will be gaining from the limited time-related premiums. Therefore, the move offers short-term portfolio protection at a very low cost.

Bottom Line

There have already been monthly futures existing in the NSE, and the weekly futures look to complement these. Market players should be expectant of the short-term tool and the hedging option that it allows them. Moreover, capitalising on international market movements is also a significant plus for the move.

Frequently Asked Questions

1. What are futures?

Futures are financial derivative contracts, that ‘force’ or hold accountable two agreeing parties to transact some assets at a predetermined rate and at some future date rather than at the current market price. Futures are used for trade speculation and hedging.

2. What are weekly futures?

Weekly futures are those where the contract lasts only for a week. The contract duration starts on a Thursday and then expires 8 days later on a Friday.

3. What is the daily annual turnover in futures and options since the introduction of the options back in December?

Daily average turnover in USD-INR derivatives has increased from Rs. 17,011 crores in FY21 to Rs. 19,007 crores in FY22.

4. When do futures expire in India?

Futures contract expire on the last Thursday of the expiry month. If that happens to be a trading holiday, then the futures contract expires the previous day.