Understanding Forex Market Timings in India: A Comprehensive Guide

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The foreign exchange market in India remains open from 9 am to 5 pm; however, cross-currency trading continues till 7:30 pm. But to understand the forex market in India, we need to understand this market globally.

The biggest centres of forex trade internationally are London (the United Kingdom), New York (the US), Tokyo (Japan), and Sydney (Australia). Of the biggest centres of forex trade, only Tokyo is in Asia.

The forex market worldwide is mostly decentralised and unregulated. The time zones of various centres of forex trade are different, as they are spread all over the world. Therefore, the forex market is open 24 hours on weekdays.

The two biggest centres of forex trade are London and New York. As a result, this market is the most active when the trading sessions of these two centres overlap with each other.

Highlights

Forex market timings in India and the status of the market

How can traders participate in the Indian forex market?

Conclusion

Forex Market Timings in India and the Status of the Market

As mentioned above, the forex market remains open from 9 am to 5 pm in India. That said, India does not account for a significant share of the global forex trade.

The timing for over-the-counter (OTC) currency trades, which include forex derivatives, is from 9 am to 3:30 pm in India. In the OTC market, traders can trade contracts like spot, swap, forward, and call and put options.

Apart from the OTC market, the forex market in India also offers exchange-traded currency derivatives. Under this, traders can trade in future contracts and options on four-rupee pairs, including EUR-INR (Euro-Indian Rupee), USD-INR (US Dollar-Indian Rupee), GBP-INR (Pound Sterling-Indian Rupee), and JPY-INR (Japanese Yen-Indian Rupee). To trade in such contracts, the exchanges remain open from 9 am to 5 pm.

The Indian market offers other options too for traders. If they want to trade in currencies of countries apart from India, they can trade in cross-currency futures and options on currency pairs, such as GBP-USD (Pound Sterling-US Dollar), EUR-USD (Euro-US Dollar), and USD-JPY (US Dollar-Japanese Yen).

Trade in such contracts depends on overseas markets; hence, their trading hours are a bit extended, from 9 am to 7:30 pm.

How Can Traders Participate in the Indian Forex Market?

In India, traders can trade forex on exchanges, like the NSE, BSE, and MCX-SX. That said, the values fluctuate a lot in this market; therefore, they need to be careful.

Meanwhile, it should be noted that forex trading platforms are prohibited in India. Traders can deal in currencies, but there are quite a few restrictions. For example, they need to ensure that Indian Rupee (INR) is the trading currency.  For trading, they can couple only four currencies with INR, including USD, GBP, JPY, and EUR.

While the forex market is indeed complex, retail investors have to be extra careful. This is because, unlike institutions, they may not have the wherewithal to deal in such a market.

The Reserve Bank of India (RBI) does not allow retail investors to trade in forex for speculative purposes. There are only limited purposes for which the RBI allows retail investors to deal in forex. So before trading in forex, retail investors need to read the law carefully.

Conclusion

Forex markets tend to be a lot more complex than stock markets. This is because the forex market of one country is much more linked with that of another country than the stock market of one country is linked to that of another country.

Besides, when it comes to stock-related investments, the underlying is usually a company’s performance. It is tough to understand the underlying of a currency; the underlying can be a country’s financial situation. However, currency values depend a lot on regulations and many other factors.

Therefore, unless you are a highly sophisticated investor, we will advise you to avoid forex markets. That said, if you indeed decide to invest in forex, you should keep in mind factors, such as the timings of a certain forex market, values of respective currencies, laws pertaining to forex trade of countries, etc.

simple trick to quickly classify the option between ITM, OTM, and ATM is to compare the strike price with the spot price. In the case of call options, if the spot is higher than the strike price, it is an ‘in the money’ option, and if it is lower than the strike price, it is an ‘out of the money’ option. For put options, if the spot price is lower than the strike price, then it is an ITM option and if it is higher, then the option is OTM. When spot and strike prices are equivalent, the options are ‘at the money’.

 

Disclaimer: Investments in the securities market are subject to market risk, read all related documents carefully before investing.

This content is for educational purposes only. Securities quoted are exemplary and not recommendatory.

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