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Dubai’s new futures exchange said on Wednesday it would begin trading the world’s first contracts on the Indian rupee on June 7 to tap India’s growing share of international trade and investment.
Each rupee-dollar contract will represent 2 million rupees ($46,710), the Dubai Gold and Commodities Exchange (DGCX) said in a statement.
Prices will be quoted in U.S. cents per 100 Indian rupees and the maximum price fluctuation will be $2 per contract, it added.
“The DGCX Indian Rupee contract will for the first time in history enable individuals and companies to have the opportunity to hedge and trade their Indian Rupee risk on transparent and equal basis that an exchange provides,” Colin Griffith, DGCX chairman, said in the statement.
The rupee has been convertible on the current account since 1994, meaning it can be changed freely into foreign currency for specific purposes such as trade-related expenses. But it cannot be converted freely for activities such as acquiring overseas assets.
A central bank-appointed panel has recommended a three-phase, five-year plan to allow fuller rupee convertibility and greater movement of capital in and out of the local currency by the end of the 2010/11 fiscal year.
But the central bank, which says it intervenes to smooth volatility, introduced a new regulation, which eliminates margin calls as an allowed transaction.
The new policy slammed the door on Indian residents that trade commodities futures contract through brokerages on exchanges such as the New York Mercantile Exchange (NYMEX).
The DGCX launched the Middle East’s first currency futures last year, trading euro-dollar, yen-dollar and sterling-dollar contracts.
The United Arab Emirates, the Arab world’s second-largest economy, now ranks third, after the United States and China, in terms of India’s annual two-way trade.
It wants to become India’s leading trading partner, its prime minister said in March. Foreigners make up 85 percent of the UAE’s population of about 4.1 million, most of them from South Asia.
The DGCX is based in Dubai, the Gulf’s international commercial hub and one of seven emirates in the United Arab Emirates federation. The exchange, which also trades futures contracts in gold, silver and fuel oil, plans to introduce silver options and futures |
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