Scribd Logo
Upload

Welcome to Scribd!

  • 27 views

    NGMG Outline

    Uploaded by

    api-19739167
    In this note, we look at the evolution of the forex derivatives market in India. We also explore the hedging mechanism currently used by Indian corporates. A further development in the derivatives market could also see derivative products linked to commodities, weather, etc.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd

    NGMG Outline

    Uploaded by

    api-19739167
    27 views2 pages
    In this note, we look at the evolution of the forex derivatives market in India. We also explore the hedging mechanism currently used by Indian corporates. A further development in the derivatives market could also see derivative products linked to commodities, weather, etc.

    Original Description:

    Original Title

    ngmg-outline

    Copyright

    © Attribution Non-Commercial (BY-NC)

    Available Formats

    PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    In this note, we look at the evolution of the forex derivatives market in India. We also explore the hedging mechanism currently used by Indian corporates. A further development in the derivatives market could also see derivative products linked to commodities, weather, etc.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    27 views2 pages

    NGMG Outline

    Uploaded by

    api-19739167
    In this note, we look at the evolution of the forex derivatives market in India. We also explore the hedging mechanism currently used by Indian corporates. A further development in the derivatives market could also see derivative products linked to commodities, weather, etc.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 2

    Foreign Exchange Derivatives Market in India:

    Status and prospects


    Neeraj Gambhir Manoj Goel
    August 12, 2002

    Foreign Exchange derivatives market is possibly one of the oldest derivative


    markets in India. As Indian businesses become more global in their business
    approach, evolution of a broad based, active and liquid forex derivatives markets
    would provide them with a spectrum of derivative products to effectively manage
    their foreign exchange exposures.
    In this note, we look at the evolution of the forex derivatives market in India,
    study the liquidity and the depth in these markets. We also explore the hedg-
    ing mechanism currently used by Indian corporates, as well as conjecture how
    the hedging mechanisms might change with a continuously evolving regulatory
    regime and increasing convertibility on the capital account.
    Increasing convertibility on the capital account would accelerate the process
    of integration of Indian financial markets with international markets. Some of the
    necessary preconditions to this as suggested by the Tarapore committee report are
    already being met. Increasing convertibility does carry the risk of removing the
    insularity of the Indian markets to external shocks like the South East Asian crisis.
    However proper management of the transition should speed up the growth of the
    financial markets.
    Increasing convertibility and regulatory impetus for new products will allow
    introduction of a host of innovative products and structures, tailored to business
    needs. The possibilities are many and include INR options, both rupee and cross
    currency swaptions, as well as structures composed of the above to address busi-
    ness needs as well as create real options. A further development in the derivatives
    market could also see derivative products linked to commodities, weather, etc
    which would add great value in an economy where a substantial section is still
    agrarian and dependent on the vagaries of the monsoon.

    1
    The proposed structure of our paper is:

    1. The need for a liquid forex derivatives market from the economic point of
    view.

    2. The evolution of the forex derivatives market in India.

    3. The derivatives products currently available and analysis of their liquidity.

    4. The proposed derivative products for introduction in Indian forex markets.

    5. A roadmap for the introduction of forex derivatives products.

    6. Conclusion.

    You might also like