SGX rupee futures volumes surged 600% since June

It has grown consistently since its November 2013 launch.

Steps taken by the Reserve Bank of India (RBI) to shore-up its currency, coupled with the bullish market sentiments buoyed by the Indian elections in May this year, have helped to push the Indian Rupee (INR) to outperform other major Asian currencies over the past 12 months, according to SGX.

With the USD/INR spot exchange rate currently at 60.95 (23 September close), the INR has now appreciated by over 8% against the US Dollar (USD) on a year-on-year basis, as illustrated in Chart 1 below.

The SGX INR/USD futures is one of the tools which offshore investors could use to manage currency risks associated with their exposure to the India market.

Trading in SGX INR/USD futures reached a new single-day record high of 15,507 contracts, which represents over half a billion US dollars in notional value traded.

Volumes in SGX INR/USD futures have been growing consistently each month since its launch in November 2013, driven by a surge in investor interest and new customer participation.

Here's more from SGX:

The Indian economy continues to show signs of gradual improvement on the back of a recovery in business expectations, exports and industrial production. The favourable outlook also reflects stronger sentiments arising from the newly-elected government’s promise to prioritize economic reforms and enhance the country’s business environment. In its report titled “India Outlook: Prospects Brighten”, Moody’s Analytics expects India’s GDP growth to reach a 6 per cent pace by the end of 2014.

While downside risks have receded around the external sector and fiscal deficit, inflationary pressures may see the Reserve Bank of India (RBI) keep monetary conditions unchanged in the near term as authorities focus on inflation containment over supporting economic growth. The benchmark policy rate has been kept at 8.0% since January 2014.