RE: [MTC Global] Currency Futures in BSE

Professor Goel is right that sometimes commodity or currency futures may lead to speculative transactions or "SATTA" bazar. But these situations can not be taken as a general law, rather should be considered as exceptional situations for commercial business. In general, dealing rooms in commercial banks as well as middle office for debt management conduct continuous research to deal with risk associated with exchange rate fluctuations and there are standard models in international finance to set benchmarks for interest rate and exchange rate for multiple currencies. One may argue that setting up such a technical risk management office is going to be very expensive, but not having one may be more expensive as in the case of example cited by Professor Goel. 

Dr. Tarun Das
World Bank Technical Adviser (Public Debt Management)

Ministry of Finance, Govt of Bangladesh, Dhaka.

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From: goel.virendra@gmail.com
To: join_mtc@googlegroups.com
Subject: RE: [MTC Global] Currency Futures in BSE
Date: Mon, 2 Dec 2013 12:35:39 +0530

This is a question to Dr. Das – how will it trigger the speculations and its adverse effects. In course of my business, I have seen colleagues entering into speculative buying and selling currencies and ultimately landing into huge losses that could not be recovered by the banks. Commodity exchanges were started for hedging but our  experience has shown that they have become centers of speculation or what we call in our language 'SATTA'.

Regards

Virendra Goel

  

 

From: join_mtc@googlegroups.com [mailto:join_mtc@googlegroups.com] On Behalf Of Tarun Das
Sent: Monday, December 02, 2013 11:52 AM
To: MTC Global
Subject: RE: [MTC Global] Currency Futures in BSE

 

I have not read the article. But, I welcome such derivatives of foreign exchange markets for India. In developed countries, currency futures is an important and common derivatives of foreign exchange  markets for active debt management. In a way it provides specified foreign exchange at an agreed exchange rate in future and could be beneficial for a debtor if the actual rate of depreciation happens to be lower than the agreed rate for currency futures. So there is no harm if such derivatives are developed for Indian borrowers of external loans denominated in foreign currency and for exporters and importers who resort to short term trade loans in foreign currency.

Dr. Tarun Das
World Bank Technical Adviser (Public Debt Management and Policy)
Deepening MTBF and Strengthening Financial Accountability Project
Ministry of Finance, Government of Bangladesh,
20th Floor, 6th Building, Bangladesh Secretariat, Dhaka.
Website: www.spemp.com/ www.mof.gov.bd/dmtbf

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Date: Mon, 2 Dec 2013 11:19:41 +0530
Subject: [MTC Global] Currency Futures in BSE
From: ekambarkodali@gmail.com
To: join_mtc@googlegroups.com

Hi All,

Hope you have seen the news article about introduction of Currency Futures trading in BSE the other day in Economic times.

What is your opinion on the same?

 

Ekambar Kodali
Pg. Mgr/Sr. Con/Arch
Worlds No. 1 IT Company
9966208523

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