The Indian financial system will soon beadding one more future, the absence of which of late has been very strongly felt. In an environment where the value of rupee in terms of US dollar has seen a bumpy ride in the last one year rising and falling more than 10%, the cup of woes of the affected companies never seemed to stop overflowing.
The forward contracts, whereby two parties can agree among themselves to buy or sell, as the case may be, currencies at a future rate at a predetermined rate were indeed resorted to, but not all corporates were fortunate enough to have access to this tool. The sheer size of the contracts was the constraint: large size, to be precise, which essentially meant that small corporates are unwelcome to this club of forwards.
The search for alternative tool which will be more investor-friendly and competitive and transparent is expected to find its match once the bourses start currency futures trading as the RBI has already has given the go-ahead by unveiling the norms and initiating the procedures as per the recommendations of the joint panel set up by itself and the Securities and Exchange Board of India (Sebi). |
