A SYNOPSIS ON

“CURRENCY DERIVATIVES”

AT

“HDFC BANK LTD”

BY

SINDHUJA GADA

(HALL TICKET NO: 2129-18-672-134)

Synopsis for project to be submitted for the award of the degree of

MASTER OF BUSINESS ADMINISTRATION

OSMANIA UNIVERSITY

2018-2020

AURORA’PG COLLEGE, MUSARAMBAGH

 CHAPTER PLAN

CHAPTER-1
INTRODUCTION
SCOPE OF THE STUDY
OBJECTIVES OF THE STUDY
METHODOLOGY OF THE STUDY
LIMITATIONS OF THE STUDY
CHAPTER-2
REVIEW OF LITERATURE
CHAPTER-3
INDUSTRY PROFILE
COMPANY PROFILE
CHAPTER-4
DATA ANALYSIS AND INTERPRETATION
CHAPTER-5
SUGGESTION
FINDINGS & CONCLUSION
BIBLIOGRAPHY
 INTRODUCTION OF CURRENCY DERIVATIVES

Each country has its own currency through which both national and international
transactions are performed. All the international business transactions involve an exchange
of one currency for another. For example, If any Indian firm borrows funds from international
financial market in US dollars for short or long term then at maturity the same would be
refunded in particular agreed currency along with accrued interest on borrowed money. It
means that the borrowed foreign currency brought in the country will be converted into
Indian currency, and when borrowed fund are paid to the lender then the home currency will
be converted into foreign lender’s currency. Thus, the currency units of a country involve
an exchange of one currency for another. The price of one currency in terms of other
currency is known as exchange rate.

The foreign exchange markets of a country provide the mechanism of exchanging

different currencies with one and another, and thus, facilitating transfer of purchasing power
from one country to another. With the multiple growths of international trade and finance all
over the world, trading in foreign currencies has grown tremendously over the past several
decades. Since the exchange rates are continuously changing, so the firms are exposed to the
risk of exchange rate movements. As a result the assets or liability or cash flows of a firm
which are denominated in foreign currencies undergo a change in value over a period of time
due to variation in exchange rates.
This variability in the value of assets or liabilities or cash flows is referred to exchange rate
risk. Since the fixed exchange rate system has been fallen in the early 1970s, specifically
in developed countries, the currency risk has become substantial for many business firms. As
a result, these firms are increasingly turning to various risk hedging products like foreign
currency futures, foreign currency forwards, foreign currency options, and foreign currency
swaps.
NEED OF THE STUDY

1. Currency-based derivatives are used by exporters invoicing receivables in foreign

currency, willing to protect their earnings from the foreign currency depreciation by
locking the currency conversion rate at a high level.
2. Their use by importers hedging foreign currency payables is effective when the
payment currency is expected to appreciate and the importers would like to guarantee
a lower conversion rate.
3. Investors in foreign currency denominated securities would like to secure strong
foreign earnings by obtaining the right to sell foreign currency at a high conversion
rate, thus defending their revenue from the foreign currency depreciation.
4. Multinational companies use currency derivatives being engaged in direct investment
overseas.
5. They want to guarantee the rate of purchasing foreign currency for various payments
related to the installation of a foreign branch or subsidiary, or to a joint venture with a
foreign partner.
6. Their operations are influenced by politics and the law of the country where they
operate.
OBJECTIVES OF THE STUDY

 The basic idea behind undertaking Currency Derivatives project to gain knowledge about

currency future market.

 To study the basic concept of Currency future

 To study the exchange traded currency future

 To analyze different currency derivatives products.

 To know the currency futures are used as risk management tool.

 To analyze income statement and find out the revenues when the dollars are converted into

Indian rupees.

 To study the different types of foreign exchange exposure including risk management

techniques which the company is use to maximize the risk.

 To present findings and conclusions of the company in respect of foreign exchange risk

management.
SCOPE OF THE STUDY:

1. To know what is foreign exchange and what are various foreign exchange services.

2. To know how the transactions related to foreign exchange volatility carried out.

3. To have a brief knowledge about various foreign currencies and their exchange rates compare
to other nations currencies.
METHODOLOGY

All the data and information is collected by me from different sources for the preparation of
this report. To prepare the report, I have adopted following methodology.

Primary Data:
The primary data has been collected from the experts officials and employees working in
HDFC LTD.

Secondary Data:
Secondary data were used such as various books report submitted by RBI/SCBI committee
and NCFM/BCFM modules.
I have used internet links are given for the same
LIMITATIONS:

1. The study is confined just to the foreign exchange risk but not the total risk.
2. The analysis of this study is mainly done on the income statements.
3. This study is limited for the year 2018-2019.
4. It does not take into consideration all Indian companies foreign exchange risk.
5. The hedging techniques are studied only which the company adopted to minimize foreign
exchange risk.
 BIBLIOGRAPHY

Reference Books:

1. Financial Derivatives (theory, concepts and problems) By: S.L. Gupta.

2. NCFM: Currency future Module.
3. BCFM: Currency Future Module.
4. Center for social and economic research) Poland
5. Recent Development in International Currency Derivative Market by: Lucjan T.
Orlowski)
6. Report of the RBI-SEBI standing technical committee on exchange traded currency
futures) 2008
7. Report of the Internal Working Group on Currency Futures (Reserve Bank of India,
April 2008)

Websites:

www.mcx.sx.com
www.rbi.org.in
www.economywatch.com
www.nseindia.com
www.commodityonline.com
www.HDFC.com
www.sebi.gov.in
www.indiabulls.com
www.frost.com
www.wikipedia.com
www.bseindia.com
www.hdfcbank.com

Other sources:
1. Report of the RBI-SEBI standing technical committee on exchange trade currency future,
2016-17.
2. Report of the internal working group on Currency Futures.