Forex Market/ Currency Market/ Import and Export

Base Currency = 1 Unit

Term/ Quotation Currency = Another countries currency which equaled to the base currency

Currency Pair= USDINR; EURINR; GBPINR; YENINR

1USD (Base Currency)= 73 INR ( Quotation Currency)/ 73.4/72.6/75/71

1USD= 70 INR ( home currency has become strong )

1USD= 78 INR ( home currency has become weak)

1USD= 1INR Why not this?

Reason: interest rate; inflation; GDP; unemployment rate; Balance of payment; Trade deficit; fiscal
deficit; manufacturing deficit; consumer price index; political stability; retail sales

Spot market/ Future market

Future market only for UDSINR; GBPINR; EUROINR; YENINR

24*7 market (Asia- Europe- America-Asia- Europe- America)

Currency pair trading

Future contract cycles for = upto 12 month

Initial margin basis of trading

Forex market/
CH
Forex Broker Forex broker

Currency Future =
Buyer of USD 1USD= 70 INR Seller of USD
Contract = 3 m
(Exporter)
Lot size= 10 lakh Dollar

Exporter has exported items worth Rs. 7 crores at current USD value of Rs. 70. He will receive 10 lakh
dollar after 3 month from the importer.

S1: 1 USD= 70 INR: No profit and No loss to seller and buyer.

S2: 1 USD= 71 INR: the seller is in loss of 1 rupee against each dollar; The seller will pay the loss of Rs.
1000000*1= 10,00,000; But seller will sell the 10 lakh dollar which he has received from the USA in the
market at 71. The seller will receive 1000000*71= 7,10,00,000. Actual amount received by seller will be
7,10,00,000-1000000= 7,00,00,000.

S3: 1USD= 69 INR after 3 months; The seller is in profit of 1 rupee against every dollar of the trade. Thus
seller will 10,00,000 from buyer. The seller will get 10 lakh dollar from USA against the trade and he will
sell these dollars in the market at 69. The seller will get=1000000*69= 6,90,00,000. The total amount
received by the seller will be 6,90,00,000+10,00,000=7,00,00,000
1000000 debture issued 10% for 10 year

Exporter ; Will get the payment after 3 months

1USD= 70 INR

10 lakh USD; Trade value in Indian rupee= 7,00,00,000 crores

After 3 months S1: 1USD= 70 INR S2: 1USD= 71 INR; S3: 1USD= 69 INR