InvestorQ : How can I benefit from USD-INR pairs trading in India in the stock exchange?
Maniish Lofar made post

How can I benefit from USD-INR pairs trading in India in the stock exchange?

Answer
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Nisha Chandani answered.
2 years ago


You heard it right. You can actually buy and sell USD-INR pairs in the stock market itself. It is quite simple. You can use your existing trading account for the same. You do not need a fresh account for currency derivatives trading. It is that simple. Here are some of the advantages.

· Any resident Indian or NRI can participate in the USD-INR pair, even if there is no underlying, up to a limit. This is unlike the forward market where you can only hedge an underlying currency exposure.

· The bid-ask spreads are as low as 0.0025 in the near month pair and that substantially reduces the liquidity risk while trading. Also the USD-INR is a fairly liquid pair and is possible to get quotes both ways with minimal risk. Also the volumes are substantial.

· Like any market mechanism, this is a lot more transparent. Unlike the forward market mechanism which is a closed market, the USD-INR pair is based on the transparent market mechanism. This makes it a lot more preferable for individual traders with limited access to information and insights. In fact, like your normal equity / F&O trading screen, you can log into your trading terminal and see the 5 best buy and sell quotes with volumes that reduces information asymmetry substantially.

Just like you trade stocks, futures and options from the comfort of your home, you can also access your currency trading account from your internet account itself. You can access the USD-INR pair either through your broker or directly from your internet trading platform which adds to the convenience and reduces the hassles of trading.