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Benefits of trading in currencies with Kotak Securities

You Pay ZERO brokerage on all currency intraday trades under our Trade Free Plan. You get to trade unlimited in currency contract at ZERO transaction cost.

For Carry forward trade you will be charged Rs. 20 per order executed

Open your trading account in less than 60* minutes

Same margin (cash or stocks) can be used for trading across all asset classes (currency, commodity and equities)

Exclusive research reports and seminars for currency derivatives trading that help you to take informed decisions.

Enrich your trading experience with Kotak’s

One-Stop Trading Platform!

Enjoy trading across currencies, equities, commodities segment

How to open an Account?

Existing Customer

New to Kotak Securities

  • You can open your Currency trading account in less than 60* minutes.

What is Currency Trading

Ever wondered which is the biggest and most liquid market in the world. It is not equites or commodities but foreign exchange market, also known as FX, forex, or currency market. Globally, trading in currencies primarily takes place in Over-the-Counter (OTC) market, where large financial institutions, corporate and hedge funds trade amongst each other depending upon their requirement. While corporate mainly use this market to hedge their underlying FX exposure on account of export/import, hedge funds and financial institutions use for trading or hedging their overseas investment. What makes FX market unique is its round the clock trading, liquidity, depth and leverage.

Currency trading at its most basic form is trading in currency of one country vs another. For example: USDINR where, dollar is the currency of US and INR is the currency of India. It is also known as foreign exchange marketor forexmarket. It is said to be the largest market in the world because of its size. Its daily turnover stood around USD 6.59 trillion. (Source: BIS Triennial Survey 2019), more than any other asset class.

The best part is that you can start trading in currency pair (USDINR) with as little as Rs. 2,000* margin money.

Currency Pairs in India

Currently, there are seven currency pairs available for trading on the Indian Exchanges:

INR Currency Pairs
USDINR EURINR GBPINR JPYINR
International Currency Pairs
EURUSD GBPUSD USDJPY

*Note: This is an indicative margin applicable in USDINR contract per lot. However, it can be different at the time of actual transaction.

Frequently Asked Questions

A) Currency trading – at its most basic definition - is the simultaneous Buy/ Sell of one currency against another. It is like pair trading (USD vs INR).
For example – if USD/INR is trading at

Bid Ask
74.5 74.51

and if one Buys at 74.51, it means he/she is bullish on dollar (bearish on INR). Similarly, if one sells dollar, it means bearish on dollar (bullish on INR).

A) Exchange Traded Currency Futures and Options is like any other derivatives contract (NIFTY, Bank NIFTY) that gets traded on exchange having fixed contract size and expiry date.

A) Presently, there are 7 currency pairs available in futures and options:

INR Currency Pairs
USDINR EURINR GBPINR JPYINR
International Currency Pairs
EURUSD GBPUSD USDJPY
Note: Weekly option is available in all INR pairs expiring every Friday of the week. Weekly Futures available only in EURINR, GBPINR and JPYINR.

A) Exchange traded Currency Futures & Options has not only opened a new asset class to the individuals but also gives opportunity to express their price view on USDINR and other currency pairs. Some of the advantages of Exchange Traded Currency Futures & Options are as follows:

  • Lower Transaction cost- There is no STT/CTT applicable in Currency Futures & Options. Stamp duty is also the lowest (Rs.10 per crore – only on buy side) of all the products that gets traded on exchange.
  • Smaller Contract size- All contracts are of value less than one lac. Easier to take price view.
  • Lower Volatility- Compared to other products (Nifty/Gold etc.), USDINR has lower volatility and hence easier to manage position.
  • Longer Trading hours- As currency market trades from 9 am to 5 pm, one gets additional one and a half to trade in currency and more time to react.
  • Higher Leverage- Because of low margin, leverage can go as high as is as high as 33X to 40X (USDINR).
  • Low Margin- Margin required is usually in the range of 2.5% to 5% depending upon currency pair.
Indicative Margin Requirement
Nifty 18% - 20%
Gold 8% - 10%
USDINR 2.50% - 3%

A) Indicative margin in different currency pairs as follows:

USDINR EURINR GBPINR JPYINR
Indicative Margin 2.5% to 3% 3% to 5% 3% to 5% 3.5% to 5%
Note: The margin percentage can be different at the time of actual transaction

For example – for one lot of USDINR, margin requirement would be in the range of Rs. 1,875 (75000 * 2.5%) to Rs. 2,250 (75000 * 3%).

A) Margin can be given in the form of cash or approved securities with applicable hair-cut. In fact, one can use the same margin given for equity F&O provided he/she is activated to trade in currency segment.

One can trade in the multiples of the above lots both in futures and options.

INR Currency Pairs International Currency Pairs
USDINR EURINR GBPINR JPYINR EURUSD GBPUSD USDJPY
1 Lot = $1000 € 1000 £1000 ¥100000 € 1,000 £1000 $1000
INR Currency Pairs
USDINR EURINR GBPINR JPYINR
1 Lot = $1000 € 1000 £1000 ¥100000
International Currency Pairs
EURUSD GBPUSD USDJPY
1 Lot = € 1,000 £1000 $1000

For example – If USDINR is trading at 74.50, value of one lot = ($1000 * 74.5050 = 74505). If EURINR is trading at 87.35 value of one lot = (€1000 * 87.3525 = 87352.50)

A) Minimum tick size is 0.0025p across all futures and options contracts.
Basically, it means that in one tick, maximum price movement is Rs. 2.5 (1000 * 0.0025).

A) Currency futures and options market trade from 9 AM to 5 PM, Monday to Friday.

A) Both futures and options are cash settled.

Daily settlement happens as per the last half an hour weighted average price.
However, final settlement for monthly contracts happens at FBIL reference rate at 12:30 pm. Unlike equity, which expires on last Thursday of every month, currency futures and options contracts expire two working days prior to the last business day of month.
For example, if Sep 30, 2020 (Wednesday) happens to be last working day of month, September futures and options contract would expire on Sep 28, 2020 (Monday) at 12:30 pm at RBI reference rate declared by FBIL.
Weekly option contracts expire every Friday at 12:30 pm at RBI reference rate.

A) Price movement in any currency pair is an outcome of many factors, ranging from geo-political risk (like Indo-China border issue) to macro developments (fiscal deficit, trade deficit, inflation etc.) to overall risk sentiment. However, short term price movements in USDINR is mainly influenced by

Capital flows Higher the inflows, positive for USDINR
Higher the outflows, negative for USDINR
RBI Intervention RBI intervenes on both sides (buy and sell) to smoothen the extreme movements in USDINR.
Dollar Index (DXY) Stronger the DXY, stronger the dollar
Weaker the DXY, weaker the dollar
Global Risk Sentiment Higher the risk-on sentiment, positive for USDINR
Lower the risk sentiment, negative for USIDNR

Global risk sentiment – A global risk-on sentiment is normally seen as positive for emerging market currencies like USDINR etc. One can look at other emerging market currencies like USDCNY, USDKRW, USDIDR, USDZAR etc. to gauge the likely price movement in USDINR. It is similar to how equity market participants’ looks at global equity indices and tries to gauge the intra-day move in local equity market.

Trade and current account balance - A worsening trade deficit (export < import) is negative for rupee. Whereas an improving trade balance, is positive for INR. Crude oil has a large share in Indian import basket and hence its movement does impact USDINR.