Indian Currency Market 2w35n

INDIAN CURRENCY MARKET

Presented by: ATUL VAGAL ADITYA JAMBHEKAR PRAFUL AMBRE ANKITA SHAH SNEHA PATEL

03 07 10 20 37

INTRODUCTION • Derivative are financial contract whose value is determined from one or more underlying variables • Currency futures based on Euro(EUR)-INR, Pound Sterling(GBP) - INR and Japanese Yen (JPY) - INR exchange rates in addition to the existing USDINR contracts are traded over exchange

Participant in currency market • Investors • Hedgers • Arbitrager

Currency Future contract specification • Underlying • Exchange • Trading Hours • • • •

- USD/INR -NSE and MCX-SX -Monday to Friday 09:00 AM – 05:00 PM Unit of trading - 1 contract unit denotes USD 1000 Tick Size - Rs 0.0025 or 0.25 paisa Last Trading Day - Two working days prior to the last business day of the expiry month at 12:15pm. Initial margin - SPAN Based Margin

• Extreme loss margin- 1% of MTM value of gross open position

Rupee depreciation- cause and effects CAUSES • Since the great depression of 2008, the Indian economy had been continuously slowing down. • rate of unemployment in the nation increased • The high import of gold and crude oil in such a situation burdened the current deficit and caused it to rise • (FII’s) lost faith in the Indian economy

• Increased demand of dollar

Rupee depreciation- cause and effects Effects • Imports have become costlier and thus importing crude oil becomes a burden • the industry level the cost of borrowing has been increased for the companies which had taken foreign loans

• the prices of all imported goods have increased. • Students going broad to study now have to shed 20% extra for every dollar.

STEPS TAKEN BY RBI The Reserve Bank of India (RBI) further curbed the availability of funds (liquidity) in the markets to stem the rupee's free fall against the US dollar. The central bank will now auction the government of India cash management bills (CMBs) to raise Rs 22,000 crore on every Monday. RBI is planning to sell dollars directly to oil companies to ease pressure on the currency. RBI is reduced the limit for Overseas Direct Investments (ODI) by domestic companies, other than oil sector. RBI has just limited the ODI from 400 % to 100% of Net worth. RBI has put curbs on gold imports while conducting open market operations of Government bonds.

RUPEE DEPRECIATION-EFFECTS ON IT SECTOR

WIPRO

TCS INFOSYS

Impact on Scrip Infosys 1) Rupee fall leads to increase the wage hike impact in Infosys. 2) Infosys reaches five month high, reducing a rupee became a booster.

3) Week rupee strengthen Infosys revenue help

Conclusion

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