Undeterred by the "mini derivative" crisis that hit several Indian companies during the last two years, the exchange control regulator and the apex bank of India - the Reserve Bank of India (RBI) has extended the currency futures to the Euro and the Yen. In August 2008, just when the global financial crisis began precipitating, India introduced currency futures for the US dollar. With the objective of improving the depth and transparency in the Indian currency futures market, the RBI has now expanded the currency pairs that can be traded on recognized stock exchanges in India. Until now, persons resident in India were permitted only to trade in US Dollar (USD)-Indian Rupee (INR) currency futures contracts in recognized stock exchanges. In order to facilitate direct hedging of currency risk in other currency pairs as well, RBI has permitted the recognized stock exchanges to offer currency futures contracts in the currency pairs of Euro-INR, Japanese Yen (JPY)-INR and Pound Sterling (GBP)-INR, in addition to the USD-INR contracts.
Large trade volumes with Europe (US$ 56 billion) and Japan (US$ 10 billion) make a case for introducing hedging instruments in their currencies.
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