The Dubai Gold and Commodities Exchange (DGCX) has announced the expansion of its portfolio of more exotic FX products, adding futures on the Russian ruble, the Korean won and the South African rand.
The new futures contracts complement the DGCX emerging-FX portfolio of derivatives products which, up until now, included only the Indian rupee. The products will enhance the position of the DGCX as the largest exchange-traded FX derivatives venue in the region.
The contracts are cash settled, trading from Monday through Friday from 8:30am to 11:30pm Dubai Time (4:30am to 7:30pm GMT). The contracts are sized at USD 50,000 with the contract price quoted in US dollars.
Clearing the new offerings is the wholly owned subsidiary of DGCX, the Dubai Commodities Clearing Corporation (DCCC).
The DGCX Interim CEO, Gaurang Desai, commented in the announcement, “Emerging Market currencies have been extremely volatile in the past few years due to various macro-economic factors. The launch of the Russian Ruble, Korean Won and South African Rand Futures represents an important facet of our comprehensive and long-term Emerging Market product strategy.”
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“With the increasing prominence of these three currencies in the emerging – markets landscape, the launch of these contracts assumes considerable significance. The Middle East’s trading links with South Africa, Russia and South Korea have been growing rapidly over the past few years and businesses transacting with these markets need to make sure that their currency price risk is managed effectively to ensure their long-term sustainability,” he added.
Hedging strategies are key in transacting with volatile emerging markets’ currencies with most of the region’s own currencies pegged to the value of the US dollar, which brings stability to the domestic market but increasing risks from spillover effects from lower oil prices.
Following are the full specifications of the new contracts offered.