A surge in investors’ interest in rupee futures is contributing majorly to the growth at the Dubai Gold & Commodities Exchange (DGCX), the only exchange outside India where rupee futures can be traded.
Trust Securities DMCC, a specialised financial brokerage firm, has said that there has been a surge in investors’ interest in trading of rupee futures and foreigners, who cannot access the Indian exchanges, have turned to the DGCX to trade the rupee-dollar futures contact.
Trading volume at the DGCX has grown at twice the rate of world derivative exchanges, with the year 2011 seeing a 110% increase in volumes over the year 2010, the highest annual volume since the exchange commenced trading in November 2005 as the region’s first commodity derivatives exchange.
The leading derivatives exchange in the West Asia is an initiative of the Dubai Multi Commodities Centre (DMCC), Financial Technologies (India) and the Multi Commodity Exchange of India (MCX).
The multi-asset broker across a broad range of listed derivatives and equity securities said the activity levels in the rupee-dollar futures are a major contributor to that growth having risen to over 563% above 2010 levels.
“Over the past eight months or so volatility in the rupee has increased, offering better opportunities to traders and short-term investors who can take advantage of price trends,” said Bruce Powers, research head, Trust Securities. “A big advantage of the futures market is that it offers opportunities to profit whether the market is trending up or down.”
He said a second trading strategy being employed was called arbitrage. With arbitrage, a trader was attempting to exploit small price differentials between different rupee futures markets.