Currency Corner by Kotak Securities

04 Apr 2024 07:39

change in vol curve on NSE in USDINR since last Thursday- April expiry

Currency Corner by Kotak Securities

03 Apr 2024 05:49

There has been Tsunami 🌊 warning issued off the coast of Japan after a devastating earthquake 🫨 in Taiwan today morning.

There is not much impact on JPY till now. Risk. Off mood prevails with US Dollar Index flat but oil prices higher

Currency Corner by Kotak Securities

02 Apr 2024 03:57

Namaskar,


We would like to draw your attention to an important update regarding currency derivatives.


According to a recent notification from the RBI, users can now take long or short positions in INR pairs, namely USDINR, EURINR, GBPINR and JPYINR only against a contracted exposure, which means exposure arising from export/import or capital account transactions.


Please refer to clause 1(i)(b) for the definition of contracted exposure, and clauses 3.3(i) and 3.4(i)(a) for details on positions to be taken against contracted exposure.

Exchanges (NSE/BSE) have also intimated the trading members of the same today.


We kindly request you to take note of the notification and ensure compliance, failing which it may attract action under RBI regulations.

The notification will come into effect on April 5, 2024.
As a precaution, if you have an outstanding position in currency, we will be putting in square off mode from April 2, 2024, and will not be allowed to carry forward the position beyond April 4, 2024, end of day.


However, in case, you want to carry the position beyond April 4, 2024 kindly share the supporting documents at service.securities@kotak.com.


Your cooperation in this matter is greatly appreciated.
Thank you for your attention to this matter.


If you have any queries, please feel free to contact us at service.securities@kotak.com. For immediate assistance, you may reach out to Shubham Keshari, Manager, at shubham.keshari@kotak.com.


Thank you,
Team Kotak Securities

Currency Corner by Kotak Securities

31 Mar 2024 08:24

CFTC REPORT:

The COT report is a weekly publication by the CFTC, providing data on futures positions, long or short, for various derivatives traded on the US exchanges. It categorises speculators as retail, large, asset managers and leveraged money. Traders use it to understand market sentiment and potential trends. It's valuable for investors and analysts for making informed decisions. The report is released every Friday and related to positions as on Tuesday.



What is a PERCENTILE?


Ans:

Percentile is a statistical concept used to describe the relative position of a particular value within a larger set of values. It is commonly used to analyse and interpret data.

In simple terms, think of a percentile as a way to rank or divide a set of data into 100 equal parts. Each part represents a percentage of the total data. For example, the 50th percentile represents the middle value of the data set, dividing it into two equal halves. The 25th percentile represents the value below which 25% of the data falls, and the 75th percentile represents the value below which 75% of the data falls.

Percentiles are often used to understand how a particular data point compares to the rest of the data set. For example, if a student scores in the 90th percentile on a standardized test, it means they scored higher than 90% of the other test takers. ⬇️⬇️⬇️

Currency Corner by Kotak Securities

28 Mar 2024 07:41

Check out the SEBI Investor website to empower yourself in the world of investing. Click on the link to know more!👇🏽

🔗: https://investor.sebi.gov.in/

Currency Corner by Kotak Securities

28 Mar 2024 04:13

Option writing continues are traders continue to bet on low realised volatility.

Currency Corner by Kotak Securities

04 Oct 2022 06:08

USDINR:

Erratic price move continues in USDINR. Since August, USDINR has been quite erratic with intra-day price action or range limited but opening gaps large. Sudden gap ups and sudden gap downs make it difficult to carry positions overnight, whether it is a directional bet or a bet via straddle and strangles. The two strategies which are manageable under such circumstances are iron fly and butterfly. Such erratic movements may continue for the time being and hence it is advisable to stick with futures for day trading and for overnight and positional to use fly strategies.

In an iron fly, a trader sells an ATM straddle and buys a strangle. In a butterfly, the trader buys an ATM call, sells twice the quantity of an OTM call, and then buys a far-out-of-money call. The same strategy can be done with ITM calls as well and also with put options. One can tweak the strategy to suit a view of an upward drift, sideways, or downward drifting market. Both these strategies are hedged and hence can survive the current condition of erratic market conditions. One can even tweak a butterfly to take some open risks to improve the payoff. For example, one can even sell an OTM call or put option, depending on the bias. Therefore, these strategies offer immense flexibility and staying power in the market.

Global market conditions are schizophrenic at best. With geopolitics and economic outlook becoming worse and central bank interventions and actions experimental, we could continue to see massive bouts of volatility, interspersed with brief periods of lull. Dominant themes will keep shifting and that will add to the erratic behaviour in financial markets. USDINR for example may continue to oscillate within a broad range of 81.00 and 82.00 on spot.

(Expected range for the day: 81.60-82.00. Intra-day Bias: Rangebound)



GBPINR:

With UK PM’s humiliating U-turn on her tax proposal has shown that when push comes to shove, there are no red lines. As a result, UK bond yields dropped and GBPUSD recovered further. The package of measures was aimed at boosting growth by cutting taxes and regulation, funded by vast government borrowing, and included a proposal to scrap the top 45% rate of income tax paid on earnings above 150,000 pounds ($167,000) a year. But now the proposal to scrap the 45% rate has been scrapped. However, even though GBP may recover from this u-turn but the sustainability of the rally is double beyond a couple of weeks. Once the short covering is over and positions are balanced, a weak macroeconomic backdrop, energy crises, and bloated public balance sheet can lead to a fresh downside in GBPUSD and GBPINR.

(Expected range for the day: 92.25-92.85. Intra-day Bias: Volatile)



EURINR:

U.S. manufacturing activity grew at its slowest pace in nearly 2-1/2 years in September as new orders contracted, hiring slowed, and inflation cooled off. EURUSD gained on the news but EURINR is weak due to a fall in USDINR. Over the near term, cooling off in the US bond yields can push EURUSD towards parity. However, far EURINR will benefit depends on how deep the slide in USDINR is.

(Expected range for the day: 80.30-80.90. Intra-day Bias: Rangebound)



JPYINR:

USDJPY remains resilient near 145.00 in spite of the drop in the US bond yields. With USDINR pulling back, JPYINR can see more downside. The bias remains slightly downward.

(Expected range for the day: 56.45-56.95, Intra-day Bias: Downward)

Currency Corner by Kotak Securities

04 Oct 2022 05:36

Final adjustment: We are short at 43.50, now at 36 paise.

Add :

Long 81.25 put and short 81.00 put, net cost 4.50 paise.

Net trade becomes:

Short 81.75 straddle, long 82.00/82.50 call spread and long 81.00/81.25 put spread... @ net premium receivable of 39 paise.

Now it is a hedged trade, You can hold till expiry

Currency Corner by Kotak Securities

04 Oct 2022 04:51

USDINR spot reference in the offshore market is trading at 81.50, down 34 paise, due to fall in the US bond yields and rally in the global equity markets

Currency Corner by Kotak Securities

03 Oct 2022 18:32

Can join our webinar to know more on NEO mobile app

Currency Corner by Kotak Securities

03 Oct 2022 17:40

03102022

USDINR Close:- 82.04 (0.39%)
The volatility in the USDINR pair finally cooled down after massive expansion in the previous week. it was a muted session today and we saw the pair hover around the 82 mark before setteling at 82.04. From a psychological level the big figure 80 seems like it is here to stay for a while. The massive depreciation in the rupee against the dollar was majorly driven by the FED continuing to be hawkish and raising the interest rates by 75 BPS which was inline with the market expectation. What gave additional boost to the market was the hawkish commentary that followed. RBI too did not fall back and raise the interest rates by 50 BPS, this seems to have provided some relief to the constantly depreciating rupee.
As far as the data releases go, we saw the Manufacturing PMI for the month of September which came in at a three-month low (55.1) vs a forecast of 55.6 and a previous print of 56.2. At first glance one might think that the actual print has missed the estimates. Digging deeper into the figures, the factory activity expanded for the fifteenth month in a line, despite geopolitical factors and the recession creating big time headwinds.
Technically, the USDINR pair has entered crawl mode, so we can expect the pair to try moving higher, as we are now in an uncharted territory, calling out a resistance is a difficult task. We would advise to play the trend with a trailing stop loss. As of now the immediate support is placed at the psychological level of 81.

EURINR Close:- 80.27 (0.46%)
The recent economic releases suggested that the EURO Zone might be heading into a recession faster than expected. The expectation of the ECB raising the interest rates by 75 BPS after the CPI print and the dollar taking a breather seems to be providing some support to the EURO.
Technically, the EURINR pair is placed at a very crucial juncture, there are many resistances near the 81-81.20 zone. On the downside supports are expected to come in near the 80 – 79.80 zone.

GBPINR Close:- 91.85 (1.57%)
The GBPINR pair finally gathered enough momentum to break and sustain above the 91 mark. It was a very eventful session for the pound, and we saw the GBPUSD pair swiftly move higher after the Liz Truss led government reversed the planned tax cut for UK. These tax subsidies were initially planned to be financed by Debt. Which led to a massive loss of trust in the UK assets and the UK Gilts sold off bigtime.
Technically, the prices action suggests that at least for the time being we might see slight up mov in the GBPINR pair, we saw a close above the 91 mark for the first time since 22 September. The resistance is now placed around the 92.50 zone and the support is placed near the 91 handle.

JPYINR Close 56.70 (-0.01%)
The FED’s constant focus on bringing back the inflation in their target 2% mark by increasing the rates at a rapid pace has attracted a lot of capital in the dollar denominated assets. This coupled with BOJ’s adamancy to stick to ultra-loose policy has brought the policy divergence in the spotlight. The participants seem to have forgotten about the stealth intervention that the officials did to arrest the depreciation in the USDJPY pair.
Technically for the JPYINR pair, we can expect range bound moves, we expect the broader range of the pair to be between 57 and 56.30 on the downside.

Currency Corner by Kotak Securities

03 Oct 2022 10:52

Short at 57.50, cmp 52...

as USDINR is moving higher, we need to protect upside risk with a call spread.

Add this leg:

October 7th: Buy 82.00 CALL @ 20 PAISE, & SELL 82.50 CALL 6 PAISE. Net outgo 14 paise. Premium received from before @ 57.50. net premium received after adjustment = 43.50

Currency Corner by Kotak Securities

03 Oct 2022 07:51

Vols have begun to fall for weekly options

Currency Corner by Kotak Securities

03 Oct 2022 07:23

if a trader wants to bet that USDINR will not be able to move up or down, it will be rangebound.

You can tweak the strikes of butterfly to express that view

Currency Corner by Kotak Securities

03 Oct 2022 07:10

pay off of that modified trade

Currency Corner by Kotak Securities

03 Apr 2024 16:42

Strong jobs data from US overshadows a weak PMI... US bond yields tick higher..

USDINR spot reference rises to 83.56

Currency Corner by Kotak Securities

02 Apr 2024 15:45

As expectation of Fed rate cut receeds, US bond yields push higher

Currency Corner by Kotak Securities

31 Mar 2024 12:32

If an exporter would have sold USDINR 1 year futures, how has it worked over the past few financial years.

Net gain graph

Currency Corner by Kotak Securities

30 Mar 2024 03:03

Fed's Powell: Today's PCE report is 'pretty much in line with our expectations' | Forexlive
https://www.forexlive.com/centralbank/feds-powell-todays-pce-report-is-pretty-much-in-line-with-our-expectations-20240329/

Currency Corner by Kotak Securities

28 Mar 2024 04:16

USDINR spot is likely to open near 83.31 on trade within a narrow range. Today being the final trading day of the financial year, some hedging interest can be seen, especially from exporters. Support 83.25 and 83.15 and resistance 83.40 and 83.50 on spot

Currency Corner by Kotak Securities

27 Mar 2024 04:40

With last two working days of the financial year, exporter hedging may remain higher than usual.

Global cues are positive for the USDINR, as Asian currencies like CNH and JPY are trading weak.

USDINR April futures may trade within a range of 82.30 and 82.50 levels.

Currency Corner by Kotak Securities

04 Oct 2022 05:44

With dollar index trading soft at 111.50 and so are most of the EM currencies against dollar, including CNH along with overall positive risk sentiment, as reflected by strong equities today, we may see the spill-over effect of same in USDINR as well, both directionally as well as in vol terms.

Currency Corner by Kotak Securities

04 Oct 2022 05:24

USDINR : Erratic moves continue...

Currency Corner by Kotak Securities

04 Oct 2022 03:16

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Currency Corner by Kotak Securities

03 Oct 2022 18:32

https://twitter.com/kotaksecurities/status/1576899796132327424?t=XTgrhLsVy8dhGXuC7BaVgQ&s=09

Currency Corner by Kotak Securities

03 Oct 2022 12:40

Monetary Policy and FX !!!

Monetary policies generally revolve around policy rate, growth and inflation projection, liquidity position and overall central bank stance. FX generally does not constitute as a major discussion point.

In this background, however, last policy meeting was slightly different, as it has fair amount of comment on INR.

As a market watcher and given that RBI is the largest participant in FX market, it matters a lot. While most of us focussed on valuation impact on shrinking FX reserves, but possibly missed out on RBI indirectly hinting that it is not targetting any particular level and would be ok, if external environment demands so.

Governor comment in particular that, "rupee is a free floating currency and is market determined, and RBI does not have any fixed exchange rate in mind" needs to seen in a different way, after market kind of got into a complacency with 80.00 being defended for almost 2 months and then suddenly gaped up, taking everyone in surprise.

It is not that RBI has said these words first time but reiterating in a monetary policy discussion/interview, in my view, is to impress upon the point that RBI would not intervene aggressively going forward, except for period of any disorderly move, and may allow it to drift either way, if market forces warrant.

In other words, message is loud and clear that everyone needs to take care of FX risk on their own and cannot leave it to RBI to manage.

For a trader, it can be a good news as moves can become more predictable in line with domestic and global developments. So time to keep a close watch on dollar index, oil, USDCNH, dollar flows and overall risk sentiment.

Currency Corner by Kotak Securities

03 Oct 2022 08:32

That was a easy low hanging fruit to give away as a peace offering...

everyone loves to see the Rich pay more 😎😎😎

Currency Corner by Kotak Securities

03 Oct 2022 07:25

Therefore, butterfly offers immense flexibility in terms of tweaking strikes with changing market conditions and adding or closing new legs of trades.

Therefore focus on USDINR OPTION BUTTERFLY.

You can even try it with weekly as well

Currency Corner by Kotak Securities

03 Oct 2022 07:10

All these were for USDINR with a bullish drift.

You can do the same for bearish drift, using PUT OPTIONS

Currency Corner by Kotak Securities

03 Oct 2022 07:08

A modified version of butterfly.

here trader is shorting 81 strike put option to finance the cost and generate credit of 9 paise.

But he is taking unlimited risk on downside below 81