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Trade is an international business and for any trade payments are settled in Currencies, which
are specific to the countries/regions involved. Whenever any Currency is bought or sold for
another, the transaction is known as 'Currency trading'. Currency trading is the largest financial
market globally, followed by Commodities and Equities. Investors, speculators and corporates
are involved in cross-border Currency trade.
Currency Derivatives are known for their efficiency in price discoveries providing immunity
from counter-party credit risks. They also provide access to all types of market participants and
make it an easy-to-use financial instrument by offering standardised products and settlement
cycles. In Currency Derivatives, even small orders, ie up to one contract or USD1,000, can be
executed.
Similarly, when the value of the Rupee moves down to INR46/USD, we would say that the
Rupee has depreciated in value against the USD. It means we can buy USD100 for INR4,600
instead of INR4,500.