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Chapter 1

Introduction and company profile

Introduction

Currency trading, is the largest trading in the world, and continues to grow annually.
Currency Trading is the act of buying and selling (trading) different currencies of the world.
The Foreign Exchange ( Forex) is the market that allows you to trade currencies in volume.
This is called a Currency Pair. The GBP is the base currency, and the USD is the
secondary currency.

Currency trading is a 24-hour market that is only closed from Friday evening to Sunday
evening, but the 24-hour trading sessions are misleading. There are three sessions that include
the European, Asian and United States trading sessions. Although there is some overlap in the
sessions, the main currencies in each market are traded mostly during those market hours.
This means that certain currency pairs will have more volume during certain sessions.
Traders who stay with pairs based on the dollar will find the most volume in the U.S. trading
session.

Currency is traded in various sized lots. The micro lot is 1,000 units of a currency. If your
account is funded in U.S. dollars, a micro lot represents $1,000 of your base currency, the
dollar. A mini lot is 10,000 units of your base currency and a standard lot is 100,000 units.

Pairs and Pips

All currency trading is done in pairs. Unlike the stock market, where you can buy or sell a
single stock, you have to buy one currency and sell another currency in the Forex market.
Next, nearly all currencies are priced out to the fourth decimal point. A pip or percentage in
point, is the smallest increment of trade. One pip typically equals 1/100 of 1%.
Retail or beginning traders often trade currency in micro lots, because one pip in a micro lot
represents only a 10 cents move in the price. This makes losses easier to manage if a trade

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doesn't produce the intended results. In a mini lot, one pip equals $1 and that same one pip in
a standard lot equals $10.

Some currencies move as much as 100 pips or more in a single trading session making
the potential losses to the small investor much more manageable by trading in micro or mini
lots

Support and resistance

A support level is a level where the price tends to find support as it falls. This means that the
price is more likely to "bounce" off this level rather than break through it. However, once the
price has breached this level, by an amount exceeding some noise, it is likely to continue
falling until meeting another support level.

A resistance level is the opposite of a support level. It is where the price tends to find
resistance as it rises. Again, this means that the price is more likely to "bounce" off this level
rather than break through it. However, once the price has breached this level, by an amount
exceeding some noise, it is likely to continue rising until meeting another resistance level.

Doji

Doji are important candlesticks that provide information on their own and as components of
in a number of important patterns. Doji form when a security's open and close are virtually
equal. The length of the upper and lower shadows can vary and the resulting candlestick
looks like a cross, inverted cross or plus sign. Alone, doji are neutral patterns.

Any bullish or bearish bias is based on preceding price action and future confirmation.

Base Currency / Terms Currency

In foreign exchange markets, the base currency is the first currency in a currency pair. The
second currency is called as the terms currency. Exchange rates are quoted in per unit of the
base currency. Example: The expression US Dollar–Rupee, tells you that the US Dollar is

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being quoted in terms of the Rupee. The US Dollar is the base currency and the Rupee is the
terms currency. Exchange rates are constantly changing, which means that the value of one
currency in terms of the other is constantly in flux. Changes in rates are expressed as
strengthening or weakening of one currency visa versa the other currency. Changes are also
expressed as appreciation or depreciation of one currency in terms of the other currency.
Whenever the base currency buys more of the terms currency, the base currency has
strengthened / appreciated and the terms currency has weakened / depreciated.

Example.: If US Dollar–Rupee moved from 60.00 to 62, the US Dollar has appreciated and
the Rupee has depreciated.

Swaps
A foreign exchange swap is a simultaneous purchase and sale, or sale and purchase, of
identical amounts of one currency for another with two different value dates. Foreign
Exchange Swaps are commonly used as a way to facilitate funding in the cases where funds
are available in a different currency than the one needed. Effectively, each party to the deal is
given the use of an amount of foreign currency for a specific time. The Forward Rate is
derived by adjusting the Spot rate for the interest rate differential of the two currencies for the
period between the Spot and the Forward date. Liquidity in one currency is converted into
another currency for a period of time.

Move in currency

An increasing amount of stock traders are taking interest in the currency markets because
many of the forces that move the stock market also move the currency market. One of the
largest is supply and demand. When the world needs more dollars, the value of the dollar
increases and when there are too many circulating, the price drops.

Other factors like interest rates, new economic data from the largest countries and
geopolitical tensions, are just a few of the events that may affect currency prices.

3
Market participants

a. Banks
b. Commercial companies
c. Central banks
d. Forex Fixing
e. Hedge funds as speculators
f. Investment management firms
g. Retail foreign exchange traders
h. Non-bank foreign exchange companies

Types of orders

Take profit order:

A take-profit order (T/P) is an order used by currency traders specifying the exact rate or
number of pips from the current price point where to close out their current position for a
profit.

Stop Loss Order:

A stop loss order is a type of order linked to a trade for the purpose of preventing additional
losses if the price goes against you. If you are in a long position, it is a sell STOP order. If you
are in a short position, it is a buy STOP order.

Buy Limit Orders:

A buy limit order sets the maximum price that the investor will pay for the security. The
order may never be executed at a price higher than the investor’s limit price. While a buy
limit order guarantees that the investor will not pay over a certain price, it does not guarantee
them an execution. If the stock continues to trade higher away from the investor’s limit price,
the investor will not purchase the stock and may miss a chance to realize a profit.

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Sell Limit Orders:

A sell limit order sets the minimum price that the investor will accept for the security. The
order may never be executed at a price lower than the investor’s limit price. While a sell limit
order guarantees that the investor will not receive less than a certain price, it does not
guarantee them an execution. If the stock continues to trade lower away from the investor’s
limit price, the investor will not sell the stock and may miss a chance to realize a profit or
may realize a loss as a result.

Candlesticks

A candlestick is a chart that displays the high, low, opening and closing prices of a security
for a specific period. The wide part of the candlestick is called the "real body" and tells
investors whether the closing price was higher or lower than the opening price. Black/red
indicates that the stock closed lower and white/green indicates that the stock closed higher.

Bid and Ask Rate

The bid/ask spread is the difference between the price at which a bank or market maker will
sell ("ask", or "offer") and the price at which a market taker will buy ("bid") from a wholesale
or retail customer. The customer will buy from the market-maker at the higher "ask" price,
and will sell at the lower "bid" price, thus giving up the "spread" as the cost of completing the
trade.

Leverage

Leverage is the investment strategy of using borrowed money: specifically, the use of
various financial instruments or borrowed capital to increase the potential return of an
investment. Leverage can also refer to the amount of debt used to finance assets. When one
refers to something (a company, a property or an investment) as "highly leveraged," it means
that item has more debt than equity.

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Financial instruments

A. Spot
A spot transaction is a two-day delivery transaction (except in the case of trades between the
US Dollar, Canadian Dollar, Turkish Lira, EURO and Russian Ruble, which settle the next
business day), as opposed to the futures contracts, which are usually three months. This trade
represents a “direct exchange” between two currencies, has the shortest time frame, involves
cash rather than a contract; and interest is not included in the agreed-upon transaction.

B. Forward
One way to deal with the foreign exchange risk is to engage in a forward transaction. In this
transaction, money does not actually change hands until some agreed upon future date. A
buyer and seller agree on an exchange rate for any date in the future, and the transaction
occurs on that date, regardless of what the market rates are then. The duration of the trade can
be one day, a few days, months or years. Usually the date is decided by both parties. Then the
forward contract is negotiated and agreed upon by both parties.

C. Swap
The most common type of forward transaction is the FX swap. In an FX swap, two parties
exchange currencies for a certain length of time and agree to reverse the transaction at a later
date. These are not standardized contracts and are not traded through an exchange.

D. Future
Futures are standardized and are usually traded on an exchange created for this purpose. The
average contract length is roughly 3 months. Futures contracts are usually inclusive of any
interest amounts.

E. Option
A foreign exchange option (commonly shortened to just FX option) is a derivative where the
owner has the right but not the obligation to exchange money denominated in one currency
into another currency at a pre-agreed exchange rate on a specified date. The FX options
market is the deepest, largest and most liquid market for options of any kind in the world.

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Company profile

StarFing (Star Financial Group) is a leading stock, share, currency & commodity broking
headquartered in India. They operate on a unique retail focused stock trading model that
provides revolutionary trading platforms and expertise to a diversified client base.

StarFing Corporate Identity Number KR03D0029133


(2011) and also 3/93/5/3594/2014

They are registered in Bombay Stock Exchange (BSE), National Stock Exchange (NSE) and
the two leading Commodity Exchanges in the county MCX & NCDEX.

Exchange Registration Details

 AP0397134991 (NSE)
 AP0397134991 (NSE-SX)
 AP0397134991 (NSE F&O)
 AP0106120157353 (BSE)
 AP0106120157353 (BSE F&O)
 AP 111340(MCX)
 AP 111340 (NCDEX)

They also provide training, they teach client how to invest their money and make profits.
With their trading program they offer a full range of financial training course all based on
price action trading.

StarFing believe that they can offer the very best training, coaching and follow up
mentorship available anywhere. They are committed to providing world-class products and
services which exceed the expectations of their customers, achieved by teamwork and a
process of continuous improvement.

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Mission

StarFing mission is to provide comprehensive and innovative brokerage solutions backed-up


by reliable support services at extremely competitive prices to their clients.

Vision

StarFing vision is to remove ‘complexity’ out of the ‘trading equation’. They also envision
becoming one of the leading financial service providers .

Services

Advisory services:

 Training & Education

StarFing (Star Financial Group) focus on training and educating individuals about
financial market and to sharpen their skills to participate in the financial world. StarFing
came alive with the intention to provide support and guidance to new comers to the trading
world. With their knowledge and years of experience in trading they have customized the
training programme and made it simple for a layman to understand the financial market.

StarFing’s courses are targeted for individual investors or traders, novice or experienced,
who want to learn how to use the same tools and techniques as the professional traders.
These courses offer a complete education and training experience focusing on trading
fundamentals, technical analysis, risk management, and highly-developed skills of execution
for virtually any trading instrument.

Financial services:

 Financial Planning
 Investment Planning

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Risk management:

 Avoidance of activities which cause loss.


 Reduction of the frequency of loss – risk prevention.
 Reduction of the severity of loss – risk reduction.

Franchisee services:

They are offering Franchisee of their broking business arm in collaboration with Familiar
Brokers. They are providing Comprehensive and innovative Brokerage solution backed-up
by reliable support services at extremely competitive prices to their clients.

Other services:

 Real Estate
 Property Consulting
 Insurance

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Chapter 2
Work done in company and company profile

Work done in company


In the beginning when after joining the internship was trained for 20 to 25 days regarding the
basics of currency market. Correspondingly was given with a demo account to trade in
currency market. In which could trade and apply my knowledge of trading and create my own
strategies using this platform.

After few days had to make analysis on a particular currency given by our manager, and
present it to our boss. This continued for 1week.

Later my task was to analyze the market, through Fundamental analysis, Technical analysis
and Sentimental analysis.

Once was thorough with the fundamentals, was put into consolidation team. Where in the
consolidation team had to get clients for the company. Company had given a data base of
clients , and updated me the data base through mail and whatsapp.

Later was asked to assist as a financial analyst for international currency & commodities
market. My job was to carry on analysis and anticipate market fluctuations, and also
introduce this market to investors who are looking for investment. And also explained
investors how the market works and how they should carry on their investment. With my
knowledge could guide the clients about the better path for investment opportunities and
make them earn better rate of interest when compared to other investments.

And reached clients through the data base provided by the company .And also met clients and
educated them about the market and convinced them to invest.

Company had even set few targets to achieve like:-

 Open an account with minimum Investment of 500$

Rewards:

 Commission of 10dollars per transaction of the client . Based on the lot size traded.

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My learning outcome are as follows:

 Present market trends


 Future anticipation
 Better ROI

Important concepts

Trading account:

A trading account is similar to a traditional bank account, holding cash and securities, and is
administered by an investment dealer. The account is held at a financial institution and
administered by an investment dealer that the account holder uses to employ a trading
strategy rather than a buy-and-hold investment strategy.

Trading online:

Clicking and dealing


Most Forex brokers provide live streaming prices that you can deal on with a simple click of
your computer mouse. On these platforms to execute a trade:

1. Specify the amount of the trade you want to make.


2. Click on the buy or sell button to execute the trade you want.

The Forex trading platform will respond back, usually within second or two, to let you know
whether the trade went through:
 If the trade went through, you will see the trade and your new position appear in your
platform’s list of trades.
 If the trade failed because of a price change, you need to start again from the top.
 If the trade failed because the trade was too large based on your margin, you need to
reduce the size of the trade.

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Factors affecting currency market:

There are various factors affecting the exchange rate of a currency. They can be classified as
fundamental factors, technical factors, political factors and speculative factors.

Fundamental factors:

The fundamental factors are basic economic policies followed by the government in relation
to inflation, balance of payment position, unemployment, capacity utilization, trends in
import and export, etc. Normally, other things remaining constant the currencies of the
countries that follow sound economic policies will always be stronger. Similarly, countries
having balance of payment surplus will enjoy a favorable exchange rate. Conversely, for
countries facing balance of payment deficit, the exchange rate will be adverse.

Technical factors:

Interest rates: Rising interest rates in a country may lead to inflow of hot money in the
country, thereby raising demand for the domestic currency. This in turn causes appreciation
in the value of the domestic currency. Inflation rate: High inflation rate in a country reduces
the relative competitiveness of the export sector of that country. Lower exports result in a
reduction in demand of the domestic currency and therefore the currency depreciates.
Exchange rate policy and Central Bank interventions: Exchange rate policy of the country is
the most important factor influencing determination of exchange rates. For example, a
country may decide to follow a fixed or flexible exchange rate regime, and based on this,
exchange rate movements may be less/more frequent. Further, governments sometimes
participate in foreign exchange market through its Central bank in order to control the
demand or supply of domestic currency.

Political factors:

Political stability also influences the exchange rates. Exchange rates are susceptible to
political instability and can be very volatile during times of political crises.

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Speculation factors:

Speculative activities by traders worldwide also affect exchange rate movements. For
example, if speculators think that the currency of a country is overvalued and will devalue in
near future, they will pull out their money from that country resulting in reduced demand for
that currency and depreciating its value.

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Chapter 3

Review of literature

Kumar (1992), in his study indicates that while the relationship between exchange rate
fluctuations and gross level of trade is ambiguous, fluctuations have a positive impact on the
intra industry trade. The logic of the argument is that the exchange rate risk acts as a “Tax”
on the comparative advantage of the exporting sector relative to the domestic sector .If
comparative advantage is reduced economies of trading countries will become less
specialized and intra –industry trade.

Nath and Samanta,(2003), in their study examined the dynamic linkage between the
foreign exchange and stock markets for India by employing the granger causality test on daily
data during the period March 1993 to December 2002.The empirical finding of the study
suggests that these two markets did not have any casual relationship. When the study
extended its analysis to verify if liberalization in both the markets brought them together, it
found no casual relationship between exchange rate and stock price movements, except for
the years 1993, 2001 and 2002 during when a unidirectional casual influence from stock
index return to return in forex market is detected and a very mild casual influence in the
reverse direction is found in some years such as1997 to 2002

Yin-Wong Cheung and Rajeswari Sengupta, They explore the real effective
exchange rate (REER) effects on the share of exports of Indian non-financial sector firms for
the period 2000 to 2010. Our empirical analysis reveals that, on average, there has been a
strong and significant negative impact from currency appreciation and currency volatility on
market shares of India’s exporting firms. Labour costs are found to amplify the exchange-
rate effects on trade. Further, there is evidence that the Indian firms considered here respond
asymmetrically to exchange rates. A REER change effect, for example, is more likely to arise
from a negative appreciation effect than a depreciation effect. Indian firms with smaller
export shares tend to respond more strongly to both REER change and volatility than those

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with larger export shares. Services exporters are impacted more strongly by exchange rate
fluctuations than firms exporting goods. The findings on asymmetric responses, in particular,
have important policy implications.

A.Kanagaraj and Ekta Sikarwar,2011, The study examines the level of foreign

exchange exposure and its determinants for a sample of Indian firms. For this purpose, the
relationship between exchange rate changes and stock returns for a sample of 361 Indian non
financial firms is determined over April 2006-March 2011. The study finds that only 16
percent of the firms are exposed to exchange rate exposure at 10 percent level of significance.
Furthermore, out of the firms having significant exposure, 86 percent firms are negatively
affected by an appreciation of the rupee which confirms that Indian firms are net exporters.
With respect to the determinants of exchange rate exposure, it reveals that export ratio is
positively and hedging activity is negatively related to the exchange rate exposure of pure
exporter firms.

Sutha M &Vanitha S, The paper examines to the relationship between International


markets like NYSE Composite, SSE Composite, Nikkei 225 and Exchange rates like USD,
YEN, YUAN compared with INR and Indian Market is BSE SENSEX using the Descriptive
Statistics, Augmented Dickey Fuller Test and Correlation Test. This study found that is there
impact of International stock prices and exchange rates on Indian stock market. The investors
of listed companies in Nikkei 225 and SSE Composite should closely watch the movements
of other international stock markets for better returns from investment as the indices were
negatively correlated with BSE SENSEX. The international markets and exchange rates did
affect the Indian equity market so the investors should carefully invest in Indian and Global
Equity Markets. Investors can invest the money in different portfolios. It gives more returns
and also its helps domestic as well as global economic growth.

Marc Auboin & Michele Ruta, This paper surveys a wide body of economic literature
on the relationship between exchange rates and trade. Specifically, two main issues are
investigated: the impact of exchange rate volatility and of currency misalignments on

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international trade flows. On average, exchange rate volatility has a negative (even if not
large) impact on trade. The extent of this effect depends on a number of factors, including the
existence of hedging instruments, the structure of production (e.g. the prevalence of small
firms), and the degree of economic integration across countries. The second issue involves
exchange rate misalignments, which are predicted to have short-run effects in models with
price rigidities. However, the exact impact depends on a number of features, such as the
pricing strategy of firms engaging in international trade and the importance of global
production networks. Trade effects of currency misalignments are predicted to disappear in
the long-run, unless an economy is characterized by other relevant distortions. Empirical
results broadly confirm these theoretical predictions.

Anjana ,Geetha G Nair,Soumya Sreedhar, The foreign exchange market or


currency is a global, worldwide decentralized over the counter financial market for trading
currencies. Financial centres around the world function as anchors of trading between a wide
range of different types of buyers and sellers around the clock, with the exception of
weekend. The foreign exchange market determines the relative value of different currencies.
The primary purpose of the foreign exchange is to assist international trade and investment,
by allowing businesses to convert one currency to another currency. The relationship between
currencies and trade has been the object of a wide policy debate in recent times. This study
reviews part of the relevant academic literature that attempts to model and estimate the
impact of exchange rate volatility and misalignments on international trade. The review,
therefore abstract from the important factors that may have a (more or less direct) bearing on
the relationship between exchange rates and trade, such as the factors behind the
determination of exchange rates, the impact of exchange rate regimes, or the relationship
between exchange rate policies and global imbalances. Significance of the study is very
broader and covers both foreign trade and its comparison with currency market. The study
will provide a very clear picture of the relationship between foreign trade and currency
market on India. This would be helpful for further descriptive studies on the novel ideas that
will be further explored. Moreover, it would be beneficial to gain knowledge regarding
foreign trade, their process and their impact on currency market performance.

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Michel Ruta and Marc Auboin,(2011) in this paper surveys a wide body of
economic literate on the relationship between currencies and trade . Specifically, two main
issues are investigated: the impact on international trade of exchange rate volatility and
currency misalignment. Specifically, two main issues are investigated: the impact on
international trade of exchange rate volatility and of currency misalignments. On average,
exchange rate volatility has a negative (even if not large) impact on trade flows. The extent of
this effect depends on a number of factors, including the existence of hedging instruments,
the structure of production (e.g. the prevalence of small firms), and the degree of economic
integration across countries.

Joseph (2011), in this study Based on the relevant data from 1985 to 2010, in this study uses a
quintile regression model to make an empirical research about the effect of GDP and exchange
rate on foreign exchange reserve. The findings show that: Both GDP and exchange rate have a
remarkable influence on the size of foreign exchange reserve and the effect of exchange rate on
foreign exchange reserve is higher than GDP at mean place and middle and lower quintile,
smaller than GDP at higher quintile.

Bahmani-Oskoose,(2001), investigate the long-run response of Middle Eastern


countries’ trade balance to devaluation by applying the Engle-Ganger and Johansen-Juselius
co integration methodology and find a favourable long-run effect of a real depreciation on the
trade balance for seven countries.

Prof.Hasan Vergil,(1989), in this paper empirically investigates the impact of real


exchange rate volatility on the export flows of Turkey to the United States and its three major
trading partners in the European Union for the period 1990:1-2000:12. The standard
deviation of the percentage change in the real exchange rate is employed to measure the
exchange rate volatility. Co integration and error-correction models are used to obtain the
estimates of the co integrating relations and the short-run dynamics, respectively.

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Angel Serrat,(2000), in this paper examined the exchange rate behaviour in a multilateral
target zone.Introduces a new class of stochastic processes in economics, namely
multidimensional reflected diffusion processes.The restriction on interventions imposed by
cross-currency constraints. Cooperation in sharing the intervention burden in general, the
exchange rate between any two countries will depend on the fundamentals of third countries
in a multilateral target zone model .

Syed Abul Basher,(2001), the paper analyzed adopts a single equation rate behaviour
and exchange rate misalignment in Bangles. While increase in capital inflow, improvement in
terms of trade, and increase in government consumption non- tradable result in a real
appreciation of currency. Data on GDP, export, import, exchange rate, price indices, gross
fixed capital formation, private on public consumption are taken from statistical yearbook of
Bangladesh

Taylor,(2001) discusses the failure of liberalized policies in Argentina. He says that


Argentina has failed in maintaining the liberalized policies about capital flows and a firm
currency. Argentina had anti-inflation program based on freezing the exchange rate in the
early 1990s. This means that the money supply within the country and the supply of credit to
firms are tied directly to international reserves. So if the country gets capital inflows, the
supply of money and credit increases, leading to a substantial increase in domestic prices.

Edwards,(2000) investigated the dynamic association between exchange rate regimes,


capital flows and currency crises in emerging economies. The study draws on lessons learned
during the1990s, and deals with some of the most important policy controversies that
emerged after the Mexican, East Asian, Russian and Brazilian crises. He concludes that under
the appropriate conditions and policies, floating exchange rates can be effective and efficient.

Husain,(2004) found in their study that little access to international capital is available for
the weaker and less developed countries, so low rate of inflation and higher level of durability

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is associated with fixed exchange rate regime in those countries. However, they found no
robust relationship between economic performance and exchange rate regime in the
developing economies. They also found that advanced economies may experience durable
and slightly higher level of growth rate without higher level of inflation in flexible exchange
rate regime.

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Chapter 4.

Research Methodology

Research Design

A research design is a framework or blueprint for conducting the marketing Research Project.
It specifies the details of the procedures necessary for obtaining the information needed to
structure and solve marketing research problems.

Research Design:

1. Exploratory research
2. Conclusive research

1. Exploratory Design

 In exploratory design first collect the information about research.


 Understand Currency Trading market
 About Currency Trading market in India
 About Indian economy
 Currency Trading and its impact in Indian economy
 Collection of primary data by making Questionnaire
 Then collection secondary data from Books, Magazines, Internet etc

2. Conclusive research Design:

 In conclusive research main part is survey.


 In this research design we get perfect conclusion.

Objective of the study:

Primary Objective

 To Study Impact of Currency Trading in Indian economy.

Secondary Objective

 To study the on board aspects of corporate.


 To Study the various services provided by Broker house to their clients.

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 To know investors experience in Forex market,
 To study what other services investors expect from their broker house

Limitations of the study:

 Theoretical data are taken from internet; possibilities of wrong data can take in the
report.
 Respondent could provide wrong data.
 Shortage of time.

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Chapter 5
Analysis, findings and recommendations

Interpretation of questioner
Gender:-

Gender No of respondents No of respondents in %


Male 13 52%
Female 12 48%

Gender

48% Male
Female
52%

Interpretation:

From the above depicted chart we can interpret that male gender are more interested in
currency market than the female. The percentage of male gender is 52% which cover large
market. 48% of women invest in currency market that is a positive sign that the women are
also taking interest in the currency market. This shows the increasing education level of
female & awareness of this money market in female.

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Age (years): No. of respondent No. of respondent
in %
20-30 21 84%
30-40 4 16%
40-50 0 0%
50&Above 0 0%

Age(in Years)

16%

20-30
30-40

84%

Interpretation:

The chart reflects age wise division of currency investor; we can see that the number of
people having between 20 to 30 years is more interested in currency market. The awareness
of currency market is more in this age group & risk taking aptitude is m ore than other age
group, any broking firm can target this age group and can get benefits, at second age
between 30 to 40 years are investing more in currency market.

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Education No. of respondent No. of respondent in
Qualification: %
H.S.C 0 0%
Graduate 15 60%
Post Graduate 10 40%
Other 0 0%

Education Qualification

40%
Graduate
Post Graduate
60%

Interpretation:

The above graph shows the education level of investor. There is 60% of the respondent
were graduate & 40% of the respondents were post graduate. The graduates are more
interested to invest in currency market. Majority of the investor in currency market are
graduates. The majority investors are graduate & taking much interest in currency market
these education criteria investors can be targeted to get benefit to attract by broking firm.

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Occupation No. of respondent No. of respondent in
%
Business 2 8%
Self employment 3 12%
Service 11 44%
Student 9 36%
House Wife 3 0%
Other 0 0%

Occupation

8%

12%
36% Business
Self Employment
Service
Student

44%

Interpretation:

The 44% of the investors were working group people & on second the 36% of investors are
student. The main object of their investment in currency was hedging.

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Annual Income (Rs): No. of respondent No. of respondent in
%
≤ 2, 00,000 8 32%
2, 00,000- 3, 50,000 8 32%
3, 50001- 5, 00,000 4 16%
5, 00,001 ≥ 3 12%

Annual Income

12%

32% ≤ 2, 00,000
16% 2, 00,000- 3, 50,000
3, 50001- 5, 00,000
5, 00,001 ≥

32%

Interpretation:

The income criteria of the investors were 32% of the investor are having income of between
350000 to 500000 Rs. And on second position 32% of investors were having income
between 200000 to 350000.The income of the investor in the main influencing factor of
inflow for the currency market. The income between 350000 to 500000 & 200000 to 350000
is more investing in currency market and is working.

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1.What are investment avenues which you are presently Investing?

Investment Avenues
7

3 6
5 Investment Avenues
2 4
3
1 2 2
1 1 1
0

Interpretation:

The graph reflects the investment avenues of the respondent. This all respondents are
investing in currency and also invest in several avenues. The 6 respondents are investing in
insurance. On second 5 respondents are investing in other investment avenues. The IPOs,
mutual fund, currency, sip, & bonds are not so popular to invest in. the much number of
equity investors also use to invest in currency market. The awareness of currency market is
very less in India but as a view of future it’s a developing market.

27
2. In which currency do you prefer to invest?

Currency No. of respondent No. of respondent in


%
USD 13 50%
EURO 3 11.5%
GBP 0 0%
YEN 0 0%
OTHER 9 38.5%

Currency

39% USD

50% EURO
OTHER

12%

Interpretation

The survey I have carried out in which 50% of the respondent are invest in USD. There is
more trading volume in USD. The EURO is on second position to be traded. The 12% of
the respondent prefer to invest in EURO. 39% of the respondent prefers to invest in other
currencies. The more respondent prefer to invest in USD. The volume USD in currency
market is higher than the other currencies.

28
3. What is the primary objective of your investment in currency?

Objectives No. of respondent No. of respondent in


%
Hedging 6 23.1%
Volatility 1 3.8%
Speculation 4 15.4%
Arbitrage 2 7.7%

Others 12 50%

Objectives
7.70%

23%
Hedging
Volatility
4% Speculation
Others
50% 15% Arbitrage

Interpretation

The table reflects that there are 23% of the respondents are investing in currency for their
hedging purpose. Main and primary object to invest in currency is hedging and on second
stage speculation is also a one object to invest in currency market..

29
4. What is the time duration you invest in currency?

Time period No. of respondent No. of respondent in


%
Intraday 5 20%
Less than 1 months 6 24%
1-2 months 1 4%
2-3 months 1 4%
More than 3 months 12 48%

Time Period

20%
Intraday
Less than 1 months
48%
1-2 months
2-3 months
24%
More than 3 months

4% 4%

Interpretation

The time period for holding currency by the investor is less than 1 month, the 24% of the
respondent hold investment for less than 1 month and the 4% of respondent were hold for 1
to 2 months in currency. There are 20% of respondent do intraday trading in currency
market.

30
5. What factors do you determine at the time of investing in currency?

Factors to determine No. of respondent No. of respondent in %


Economy 13 54%
Political 4 15.4%
Industrial 1 4%
Export-Import 3 12%
Infrastructure 1 4%
Others 3 12%

Factors Determining

4% 12%
Economy
Poliotical
12% Induatrial
Export-Import
54%
4% Infrastructure
Others
15.4%

Interpretation

As per the survey 54% of the respondent determines economic factors before investing in
currency and 12% of the respondent determine the export & import position of the country
before investing in currency market. The 4% of the respondent were determine industrial
factors before investing. The main factors affect the currency rates are economic factors
and the export-imports of the country.

31
6. How many percentage of money do you invest in currency from your income?

Money invested in No. of respondent No. of respondent in %


currency
≤ 10 % 18 69.2%
11 % - 20 % 5 27%
21 %- 30 % 0 0%
31 % ≥ 1 4%

Money invested in currency


4%

27%
≤ 10 %
11 % - 20 %
31 % ≥

69%

Interpretation:

The criteria for investing money from the income are 69% of respondent invest , 10% of
money and the second position is 27%% of respondent invest less than 11%-20%% of
money from income in currency market. The %age of investing in currency is around , 10%
majorly.

32
7. Which currency do you most rely on?

Reliable Currencies No. of Respondents No. of Respondents %


USD 13 50%
EURO 3 11.5%
GBP 0 0%
YEN 0 0%
OTHER 9 38.5%

Reliable Currencies

39%
USD
50%
EURO
OTHER

12%

Interpretation

Form the above mention graph we can analyze the greater market share is covered by USD
for future investment there are greater no of investor to invest in USD, the 50% of the
respondent are relay on the USD and on second stage 12% of respondent are relay on
EURO. But as per my opinion the chances of USD & EURO are higher in future.

33
8. Type of return you expect in currency market?

Scale 1 2 3 4 5

No. of 2 1 12 5 6
respondent
No. of 7.7% 3.8% 46.2% 19.2% 23.1%
respondent
in %

Returns in Currency market


50
45
40
35
30
25
46.2% Returns in Currency market
20
15
10 23.1%
19.2%
5
7.7%
3.8%
0
Very Low Low Nutural High Very High

Interpretation:

In the survey I have used liker scale, a 5 point scale to measure the return from the currency
market. As per the respondents response 46.2% of respondent were neutral and 19.2% of
respondent think currency market gains high return. But 23.1% of respondent think they
gain very good return in currency market. The rates of the currency don’t vary much in a
day. Currency market is future market. The investor can earn a handsome profit from this
investment with long term investment.

34
9. How much riskier is Currency Market?

Low 1 2 3 4 5

No. of 1 2 12 7 5
Respondents
No. of 3.7% 7.4% 44.4% 25.9% 18.5%
Respondents
%

Risk in Currency market


50
45
40
35
30
25
44.4% Risk in Currency market
20
15
25.9%
10 18.5%
5
7.4%
3.7%
0
Low Very Low Nutural High Very High

Interpretation:

The risk in currency market is high only because of the currency rates are so volatile. As per
the respondents statement there are 44.4% of respondent were neutral & 3.7% of respondent
think that currency market is less risky in nature but the 18.5% of respondent were answered
that currency market is high risky.

35
Foreign exchange reserves

Foreign exchange reserves (also called Forex reserves or FX reserves) in a strict sense are
only the foreign currency deposits and bonds held by central banks and monetary authorities.
However, the term in popular usage commonly includes foreign exchange and gold, SDRs
and IMF reserve positions. This broader figure is more readily available, but it is more
accurately termed official international reserves or international reserves. These are assets of
the central bank held in different reserve currencies, mostly the US dollar, and to a lesser
extent the euro, the UK pound, and the Japanese yen, and used to back its liabilities, e.g. the
local currency issued, and the various bank reserves deposited with the central bank, by the
government or financial institutions.

Foreign-exchange
Rank Country or region reserves Figures as of
(Millions of US$)

- Europe (ECB) 75,150 February 2016

China (Hong Kong, Macau and


1 3,091,527 August 2017
Taiwan not included)

2 Japan 1,249,847 June 30, 2017

3 Switzerland 786,172 July 2017

4 Saudi Arabia 487,000 August 2017

5 Taiwan area, Republic of China 446,426 August 2017

08 September
6 Russia 427,300
2017

36
Foreign-exchange
Rank Country or region reserves Figures as of
(Millions of US$)

7 Hong Kong, China 413,300 July 2017

20 October
8 India 400,296.8
2017

9 South Korea 378,469 4 June 2017

04 October
10 Brazil 381,132
2017

11 Singapore 273,114 August 2017

12 Thailand 226,179 August 2017

13 Germany 200,394 April 2016

14 Mexico 176,852 October 2016

15 United Kingdom 163,503 March 2016

16 France 153,891 March 2016

September
17 Czech Republic 146,325
2017

18 Italy 143,183 March 2016

37
Foreign-exchange
Rank Country or region reserves Figures as of
(Millions of US$)

31 December
19 Iran 135,500
2016

Economy of india
The economy of India is a developing mixed economy. It is the world's sixth-largest economy
by nominal GDP and the third-largest by purchasing power parity (PPP). The country ranks
141st in per capita GDP (nominal) with $1723 and 123rd in per capita GDP (PPP) with
$6,616 as of 2016. After 1991 economic liberalisation, India achieved 6-7% average GDP
growth annually. In FY 2015 and 2017 India's economy became the world's fastest
growing major economy surpassing China.

Indian currency exchange

MCX-SX:
Metropolitan Stock Exchange of India Ltd. (MSE), is India’s youngest and one of the three
stock exchanges recognized by country’s securities market regulator - Securities and
Exchange Board of India (SEBI). It offers an electronic platform for trading in Capital
Market, Futures & Options, Currency Derivatives, Interest Rate Futures (IRF) and Debt
Market segments. MSEI's current shareholders include Indian public sector banks, private
sector banks, investors and domestic financial institutions.

MCX-SX’s currency derivatives segment offers an India-wide electronic platform for trading
in currency futures under the regulatory control of Securities and Exchange Board of India
(SEBI) and Reserve Bank of India (RBI).

38
MCX Stock Exchange (MCX-SX), India's new stock exchange, was launched on October 7,
2008, under the regulatory framework of Securities & Exchange Board of India (SEBI). The
exchange received approval from SEBI and Reserve Bank of India (RBI) to launch a
nationwide electronic platform for trading in currency derivatives.

Exchange rate mechanism

Foreign Exchange refers to money denominated in the currency of another nation or a group
of nations. Any person who exchanges money denominated in his own nation’s currency for
money denominated in another nation’s currency acquires foreign exchange. This holds true
whether the amount of the transaction is equal to a few rupees or to billions of rupees
whether the person involved is a tourist cashing a travellers cheque or an investor exchanging
hundreds of millions of rupees for the acquisition of a foreign company; and whether the
form of money being acquired is foreign currency notes, foreign currency denominated bank
deposits, or other short-term claims denominated in foreign currency.

Major currencies of the world

The US Dollar is by far the most widely traded currency. In part, the widespread use of the

US Dollar reflects its substantial international role as “investment” currency in many capital

markets, “reserve” currency held by many central banks, “transaction” currency in many

international commodity markets, “invoice” currency in many contracts, and “intervention”

currency employed by monetary authorities in market operations to influence their own


exchange rates.

In addition, the widespread trading of the US Dollar reflects its use as a “vehicle” currency in

foreign exchange transactions, a use that reinforces its international role in trade and finance.
For most pairs of currencies, the market practice is to trade each of the two currencies against
a common third currency as a vehicle, rather than to trade the two currencies directly against

39
each other. The vehicle currency used most often is the US Dollar, although very recently
euro also has become an important vehicle currency.

Other Major currencies include:

The Euro

Like the US Dollar, the Euro has a strong international presence and over the years has
emerged as a premier currency, second only to the US Dollar.

The Japanese Yen

The Japanese Yen is the third most traded currency in the world. It has a much smaller
international presence than the US Dollar or the Euro. The Yen is very liquid around the
world, practically around the clock.

The British Pound

Until the end of World War II, the Pound was the currency of reference. The nickname Cable
is derived from the telegrams used to update the GBP/USD rates across the Atlantic. The
currency is heavily traded against the Euro and the US Dollar, but it has a spotty presence
against other currencies.

The Swiss Franc

The Swiss Franc is the only currency of a major European country that belongs neither to the
European Monetary Union nor to the G-7 countries. Although the Swiss economy is
relatively small, the Swiss Franc is one of the major currencies, closely resembling the
strength and quality of the Swiss economy and finance. Switzerland has a very close
economic relationship with Germany, and thus to the Euro zone.

40
Major traded currencies

Rank Symbol Currency 2013 Share

1 USD U.S. Dollar 87.0%

2 EUR Euro 33.4%

3 JPY Japanese Yen 23.0%

4 GBP British Pound 11.8%

5 AUD Australian Dollar 8.6%

6 CHF Swiss Franc 5.2%

7 CAD Canadian Dollar 4.6%

8 MXN Mexican Peso 2.5%

9 CNY Chinese Yuan 2.2%

10 NZD New Zealand Dollar 2.0%

Minor currency pairs and cross- currency trading

TRADING USD/CAD BY THE NUMBERS


USD/CAD has the USD as the primary currency and the CAD as the counter currency. This
means
 USD/CAD is traded in amounts denominated in USD.
 The pip value, or minimum price fluctuation, is denominated in CAD.
 Profit and loss register in CAD.
 Margin calculations are typically based in USD, so to see how much
Margin is required to hold position in USD/CAD its simple calculation using leverage ratio.

TRADING AUD/USD BY THE NUMBERS


AUD is the primary currency in the pair, and the USD is the counter currency, which means
 AUD/USD is traded in amounts denominated in AUD.
 The pip value is denominated in USD.

41
 Profit or loss accrues in USD.
 Margin calculations are typically in USD on online trading platforms.

TRADING NZD/USD BY THE NUMBERS


 NZD/USD is traded position sizes denominated in NZD.
 The pip value is denominated in USD.
 Profit and loss accrues in USD.
 Margin calculations are typically based in USD on margin trading platforms.

Impact of Currency market in Indian economy

During last the one year Indian rupee weakens many times and reached to a level of 68.510
for a dollar in February 2016. Since January 2015, the local currency lost around 12 percent
to the US currency. Indian economy which already suffered from large fiscal and current
account deficit adversely affected by relatively exchange rate pressure. To track it again on
the way many hard decisions were taken by Indian govt.

Rupee appreciation makes imports cheaper and exports more expensive. According to
intelligence reports by the Associated Chambers of Commerce and Industry of India, sectors
like petroleum and petroleum products, drugs and pharmaceuticals and engineering goods
which have import inputs of as much as 77 percent, 19 percent and 21 percent, respectively
will gain if the rupee appreciates. They would have to pay less for the imported raw materials
which would increase their profit margins.

Likewise, a depreciating rupee makes exports cheaper and imports expensive. So, it is good
news for industries such as IT, textiles, hotels and tourism which generate income mainly
from exporting their products or services. Rupee depreciation makes Indian goods and
services cheaper for overseas buyers, thus leading to increases in demand and higher revenue
generation. The foreign tourists would find it cost effective to come to India, therefore
increasing the business of hotel, tours and travel companies.

42
India’s IT sector is dependent on foreign clients, especially the United States, for more than
70 percent of its revenue. When an IT company gets a project from a client, it pre-decides on
the length of the contract and the cost of the project. The contracts with U.S. clients are
usually quoted in U.S. dollar terms. So, the fluctuation in the exchange rate can bring about a
considerable difference in the performance of a company.

Some companies undertake a range of measures like hedging exchange risks using forwards
and futures contracts. This helps in mitigating some of the losses due to exchange rate
fluctuations, but none-the-less the impact is substantial.

The exchange rate is a significant tool that can be used to examine many key industries; with
fluctuations potentially having a serious impact on the economy, industries, companies, and
foreign investors. Rupee appreciation is generally helpful for industries which rely closely on
imported inputs while depreciation of the rupee is welcome news for industries which are
exporting a majority of their products.

43
Gross Domestic Product

The Indian economy expanded 5.7 percent year-on-year in the second quarter of 2017, below
6.1 percent in the previous period and market expectations of 6.6 percent. It remains the
weakest growth rate since the first quarter of 2014 due to a slowdown in consumer spending
and exports. On the production side, manufacturing and agriculture eased. Figures for the
second quarter of 2017 mark the third consecutive period of slowing growth, following the
demonetization program started in November of 2016 that removed 86 percent of India's
currency in circulation. GDP Annual Growth Rate in India averaged 6.12 percent from 1951
until 2017, reaching an all time high of 11.40 percent in the first quarter of 2010 and a record
low of -5.20 percent in the fourth quarter of 1979.

44
Gross National Product

Gross National product in India increased to 12034713 INR Tens of Million in 2016 from
11246305 INR Tens Of Million in 2015. Gross National product in India averaged
10192476.17 INR Tens Of Million from 2011 until 2016, reaching an all time high of
12034713 INR Tens Of Million in 2016 and a record low of 8659215 INR Tens Of Million in
2011.

45
Exports
Exports from India advanced 25.7percent from a year ago to USD 28.61 billion in September
2017, as sales increased mostly for engineering goods (44.2percent), gems & jewellery
(7.1percent), petroleum products (39.7percent), organic & inorganic chemicals (46.1percent),
RMG of all textiles (29.4 percent), and drugs & pharmaceuticals (14.7percent). Considering
April-September 2017-18, exports rose 11.5 percent to USD 147.19 billion from USD 131.98
billion in the same period of the previous fiscal year. Exports in India averaged 4986.08 USD
Million from 1957 until 2017, reaching an all time high of 30541.44 USD Million in March
of 2013 and a record low of 59.01 USD Million in June of 1958.

46
Imports
Imports to India grew 18.1 percent from the previous year to USD 37.60 billion in September
2017, as purchases increased mainly for petroleum, crude & products (18.5percent),
electronic goods (40.9percent), pearls, precious & semi-precious stones (56.9percent),
machinery electrical & nonelectrical (16.4 percent) and coal, coke & briquettes (48percent).
Considering April-September 2017-18, imports jumped 25.1 percent to USD 219.32 billion
from USD 175.34 billion in the same period of the previous fiscal year. Imports in India
averaged 7249.81 USD Million from 1957 until 2017, reaching an all time high of 45281.90
USD Million in May of 2011 and a record low of 117.40 USD Million in August of 1958.

47
Findings
 Male investors are more investing than women investors
 Awareness about currency market is very less
 In India USD, EURO, GBP, and JPY are the currencies been traded most
 During last the one year Indian rupee weakens many times and reached to a level of
68.510 for a dollar in February 2016
 Indian economy which already suffered from large fiscal and current account deficit
adversely affected by relatively exchange rate pressure
 USD distinctly emerges as the most widely used currency for overseas operations of
the respondent enterprises followed by Euro. Usage of other currencies like, GBP and
JPY is insignificant.

Suggestions

 Awareness must be created about currency market by conducting workshops and


seminars.
 American dollar is the most widely used currency of respondent enterprises for
overseas operations. There is a need for reducing the overdependence on USD. This
diversification will result in reduction in the currency exposure. Business enterprises
can think of using Euro or any other stable currency for their overseas operations.
 Awareness must be created among womens regarding currency market by conducting
workshops,seminars etc.
 Imports must be reduced ,in order to strengthen our home currency

48
Conclusion

The survey I have carried out on currency trading and its impact in Indian economy. The
conclusion of the survey is as follows.

The awareness of the forex market in India is very low in compare to other financial
instruments. Only fewer people know about the currency trading. As the gender wise male
investors are investing more than women investors. But the education level is as well a
positive sign of women also taking interest in forex market. The equity and commodity
investors are as well investing in currency. In India USD, EURO, GBP, and JPY are the
currencies been traded most.

The earning in currency market is high in comparison of Equity or Commodity market. The
volatility in currency rates is very high. It is more volatile compared to equity or commodity
market. The risk is also very high in the currency market. The main or primary object of
investing in currency market by investor is hedging. More number of respondents is
connected in the business of Import-Export. They use to hedge the currency market for future
payment and earn the deference.

49
Annexure

Questioner
Name
Gender: [ ] Male [ ] Female
Age (years): [ ] 20 – 30 [ ] 30 – 40
[ ] 40 – 50 [ ] 50 & Above
Education Qualification:
[ ] H.S.C [ ] Graduate
[ ] Post Graduate [ ] Other
Occupation: [ ] Business [ ] Self employment [ ] Service
[ ] Student [ ] House Wife [ ]Other
Annual Income (Rs):
[ ] ≤ 2, 00,000 [ ] 2, 00,000- 3, 50,000
[ ] 3, 50001- 5, 00,000 [ ] 5, 00,001 ≥
1. What are investment avenues which you are presently investing?
[ ] Equity [ ] Currency [ ] Commodity
[ ] IPO [ ] Mutual Fund [ ] Insurance
[ ] SIP [ ] Bonds [ ] Other
2. In Which currency do you prefer to invest?
[ ] USD [ ] EURO [ ] GBP [ ] JPY
[ ] Other__________
3. What is the primary objective of your investment in currency?
[ ] Hedging [ ] Volatility [ ] Speculation
[ ] Arbitrage [ ] Other_________
4. What is the time duration you invest in currency?
[ ] Intraday [ ] Less than 1 months [ ] 1-2 months
[ ] 2-3 months [ ] more than 3 months

5. What factors do you determine at the time of investing in currency?


[ ] Economy [ ] Industrial [ ] Political
[ ] Export-Import [ ] Infrastructure [ ] Other__________
6. How many percentage of money do you invest in currency from your income?
[ ] ≤ 10 % [ ] 11 % - 20 %

50
[ ] 21 %- 30 % [ ] 31 % ≥

7. Which currency do you most rely on?


[ ] USD [ ] EURO [ ] GBP
[ ] JPY [ ] Other__________
8. Type of return you expect in currency market?
Low 1 2 3 4 5 High

9. How much riskier is Currency Market?


Low 1 2 3 4 5 High

11. Any suggestions for Star financial group ./Improvement in service (feedback)
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________

51
Biblography

 http://www.investopedia.com/articles/forex/080613/effects-currency-fluctuations-

economy.asp

 http://www.india-briefing.com/news/fluctuations-indias-rupee-rate-impact-

5125.html/

 http://www.investopedia.com/terms/t/take-profitorder.asp

 https://en.wikipedia.org/wiki/MCX_Stock_Exchange

 http://shodhganga.inflibnet.ac.in/bitstream/10603/15887/13/13_chapter%206.pdf

 https://tradingeconomics.com/india/gross-national-product

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