Going long on pound brings in handsome gains for traders

MUMBAI: Currency traders have found a new straw ahead of the uncertainties related to Brexit: futures market in cross currencies.

Speculators, who short the rupee against the pound sterling expecting Britain to stay with the European Union, are now set to book profits after the British currency gained sharply in the past few days. The rupee lost about 4.2 per cent to the pound in the past five trading sessions in futures market, show data from NSE.
"Speculative bets have livened up the cross-currency futures market, particularly the rupee-pound pair," said Anindya Banerjee, currency analyst at Kotak Securities. "While corporates came to hedge, many traders found it an opportunity to make short-term gains."
"Market directions may change drastically if Britain exits Europe, which will lead to a slide in GBP," he added.

The moribund market is now showing signs of life with open interest, a measure for outstanding contracts, and prices rising significantly. So far this month, OI rose about 48 per cent. With the rupee losing value to the UK currency in the past five-six trading sessions, they will soon unwind positions booking profits just before the D day.