9

Currency Futures

LEARNING OBJECTIVES

After completing this chapter, you will be able to answer the following questions:

  • What are currency futures?

  • How are currency futures priced?

  • How are currency futures used for hedging?

  • How are currency futures used for speculation?

  • How are currency futures used for arbitrage?

BOX 9.1 India Starts Trading in Currency Futures

On June 3, 2008, the Securities and Exchange Board of India (SEBI) announced that exchange-traded currency futures would be allowed to trade on exchanges till August 2008 for investors who intended to hedge against volatility in currency markets.

Mr Bhave, Chairman, SEBI, explained that exchange-traded currency futures are far more easier to regulate and to contain risks as ...

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