Forex Trading with ICICI Direct
Recently, ICICI bank has started the Forex trading for its customers. So now you can trade in currency futures and derivative. There are several reasons to trade in forex. Here are the few reasons why you should trade in forex?
i. Hedging: You can protect your foreign exchange exposure in business and hedge potential losses by taking appropriate positions in the same. For e.g. If you are an importer, and have USD payments to make at a future date, you can hedge your foreign exchange exposure by buying USDINR and fixing your pay out rate today. You would hedge if you were of the view that USDINR was going to depreciate. Similarly it would give hedging opportunities to Exporters to hedge thier future receivables, Borrowers to hedge foreign currency (FCY) loans for interest and principal payments, Resident Indians, who can hedge their offshore investments.
ii. Speculation: You can speculate on the short term movement of the markets by using Currency Futures. For e.g. If you expect oil prices to rise and impact India's import bill, you would buy USDINR in expectation that the INR would depreciate. Alternatively if you believed that strong exports from the IT sector, combined with strong FII flows will translate to INR appreciation you would sell USDINR.
iii. Arbitrage: You can make profits by taking advantage of the exchange rates of the currency in different markets and different exchanges.
iv. Leverage: You can trade in the currency derivatives by just paying a % value called the margin amount instead of the full traded value.
If you are already an ICICIDirect.com demat account holder than you can start trading in the currency derivatives right away.
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