How to trade USDINR futures on Zerodha
USDINR currency futures on the NSE Currency Derivatives Segment (CDS) are among the most liquid currency contracts in the world by volume. A single lot represents 1,000 USD, making the contract accessible to hedgers with modest foreign-currency exposure as well as to traders seeking to speculate on the rupee-dollar rate. Zerodha provides access to this segment through Kite once the currency segment is activated.
This guide covers the full workflow from activation through to exit, with margin calculations, regulatory context, and common failure points.
Regulatory framework
Currency derivatives in India operate under the Reserve Bank of India’s FEMA 1999 framework and SEBI’s oversight of the exchanges. The key regulatory provisions are:
Eligible participants. SEBI circular SEBI/HO/MRD/DP/CIR/P/2019/143 dated 28 November 2019, as amended, specifies the framework under which residents and non-residents may participate in exchange-traded currency derivatives. Residents with an underlying forex exposure may hedge without limit. Residents without an underlying exposure may trade up to an aggregate position limit of USD 100 million across all currency pairs per exchange, subject to suitable declarations. NRIs and FPIs have separate position limits specified by RBI.
Settlement. USDINR futures are cash settled in Indian rupees at the final settlement price, which is the RBI reference rate (also called the RBI FBIL rate) published at approximately 1:30 PM IST on the last trading day. Physical delivery of USD does not occur; all gains and losses are in INR.
Margin. The exchange computes SPAN margin using the same methodology as equity F&O. Exposure margin is additional. No STT or CTT is levied on currency derivatives. Stamp duty is levied per the Stamp Act (Schedule I of the Indian Stamp Act 1899, as amended).
Contract specifications
| Parameter | Detail |
|---|---|
| Exchange | NSE Currency Derivatives Segment (CDS) |
| Underlying | USD/INR spot rate |
| Lot size | 1,000 USD |
| Price quotation | INR per USD (for example, 83.50 means 1 USD = INR 83.50) |
| Tick size | INR 0.0025 (0.25 paise) |
| Tick value | INR 0.0025 x 1,000 = INR 2.50 per lot per tick |
| Contract months | Up to 12 near monthly contracts |
| Last trading day | Two working days before the last business day of the expiry month |
| Final settlement | Cash settled at RBI FBIL reference rate |
| Trading hours | 9:00 AM to 5:00 PM IST (Monday to Friday) |
| MTM settlement | Daily, at exchange-published daily settlement price |
BSE also offers USDINR futures (and options) with similar specifications under its BSE Currency Derivatives Segment. Zerodha provides access to both NSE CDS and BSE CDS through the same Kite interface; the exchange tab in the order window allows selection.
Step-by-step procedure
Step 1: Activate the currency derivatives segment
Log in to Zerodha Console and navigate to Profile > Segments. If the Currency Derivatives row shows “Not activated”, click Activate. You may need to upload income proof (the most recent payslip, bank statement, or ITR acknowledgement). Zerodha completes activation typically by the next trading day.
Once activated, you will see the CDS segment enabled in Kite. The currency segment overview page describes what instruments are available.
Step 2: Transfer sufficient funds
Open Kite and go to Funds. Click Add funds and use UPI, NEFT, or IMPS. Funds added via UPI are credited within minutes during banking hours. Calculate the total margin needed (see step 4) and add at least 10–15 percent more to absorb intraday MTM swings.
Step 3: Search for the USDINR contract
In the Kite search bar, type USDINR and press Enter. A list of contracts appears organised by expiry month. The contract naming convention is USDINR[DDMMMYY]FUT, for example USDINR25JUN26FUT for the June 2026 near-month expiry. Add the desired contract to a watchlist by clicking the plus icon.
The near-month contract carries the highest liquidity and the tightest bid-ask spread. Mid-month and far-month contracts have progressively lower volumes. For hedging longer-dated exposures, check the open interest and bid-ask spread before choosing a far-month expiry.
Step 4: Check the margin requirement
Go to zerodha.com/margin-calculator/SPAN/ and click the Currency or CDS tab. Select USDINR Futures, enter the number of lots (positive for buy, negative for sell), and read the results table. A typical SPAN margin for one USDINR lot is approximately INR 1,500–2,500, depending on current volatility. Exposure margin adds roughly INR 400–800 more.
Total margin for one lot is therefore approximately INR 2,000–3,300 under normal conditions. Large event-driven volatility (RBI policy announcements, US Federal Reserve decisions, major global data releases) can cause the exchange to increase SPAN parameters intraday, raising the margin requirement.
Step 5: Place the order
Click the USDINR contract in your watchlist. Press B (buy) for a long position (profit if USD strengthens against INR, i.e., the price rises) or S (sell) for a short position (profit if INR strengthens, i.e., the price falls).
In the order form:
- Product: NRML for overnight; MIS for intraday (auto-squareoff at 4:45 PM IST in CDS).
- Order type: Limit (recommended) or Market.
- Quantity: enter in lots (each lot = 1,000 USD).
- Price: for a limit order, enter the price in INR per USD to two decimal places. Example: 83.45.
The order window shows an approximate margin required. Submit the order and confirm execution in the Orders tab.
Step 6: Monitor the open position
Open the Positions tab. Unrealised P&L (uPnL) updates continuously:
- Long position P&L per lot = (Current price - Entry price) x 1,000
- Short position P&L per lot = (Entry price - Current price) x 1,000
MTM settlement: at end of day, the exchange debits or credits the daily MTM from your ledger at the daily settlement price. This is different from equity delivery; you do not wait until exit to realise gains or losses day-by-day.
Watch the Available margin figure in Kite > Funds. If available margin falls to zero or below (due to adverse MTM), Zerodha’s RMS may auto-square off the position.
Step 7: Square off or roll the position
To exit, click Exit next to the position in the Positions tab before 5:00 PM IST. A sell order (for a long position) or a buy order (for a short position) is placed at market price by default; you can switch to a limit order.
To roll to the next expiry (carry the trade past the current contract’s expiry), square off the near-month contract and open a new position in the next month contract. Do this at least one or two days before the last trading day to avoid the risk of thin liquidity in the final hours.
If you do not square off by the last trading day, the contract cash-settles at the RBI FBIL reference rate. Gains or losses are credited or debited accordingly; no physical USD changes hands.
Charges on USDINR futures
| Charge | Rate |
|---|---|
| Brokerage (Zerodha) | Zero flat per executed order (CDS segment) |
| STT | Nil on currency derivatives |
| CTT | Nil on currency derivatives |
| NSE transaction charge | INR 0.35 per lakh of turnover (approximately) |
| SEBI turnover fee | INR 10 per crore of turnover |
| GST | 18% on brokerage and transaction charges |
| Stamp duty | As per state of registration (typically INR 0.002 per lakh of turnover for futures) |
For current brokerage details see Zerodha currency segment and commodity transaction tax.
What can go wrong
- Segment not activated. Attempting to add a CDS instrument to the watchlist without activation shows an “Instrument not available” error. Complete the activation process first.
- Margin shortfall after RBI rate announcement. The RBI monetary policy committee meets approximately every two months. On the day of the announcement, USDINR can move 50–100 paise in minutes. If you are holding positions, ensure a large margin buffer.
- MIS auto-squareoff at 4:45 PM. NSE CDS closes at 5:00 PM but Zerodha squares off MIS positions at approximately 4:45 PM. If you intend to hold until the close, use NRML product with sufficient margin.
- Final settlement price differs from last traded price. The RBI FBIL reference rate at 1:30 PM on the last trading day is the final settlement price. This rate can differ from the last traded price in the afternoon session. Factor this basis risk when holding contracts to expiry.
- Position limits. SEBI and the exchange set client-level position limits for currency contracts. Exceeding these results in order rejection. For USDINR, the limit for a single client is 6% of the total open interest or USD 10 million, whichever is higher.
Related guides
- Zerodha currency segment
- How to calculate margin using the Zerodha SPAN calculator
- How to compute commodity margin on Zerodha
- Kite, Zerodha’s trading platform
- SEBI
- Reserve Bank of India
- Securities transaction tax
- Commodity transaction tax
References
- SEBI Circular SEBI/HO/MRD/DP/CIR/P/2019/143 dated 28 November 2019, Framework for participation in currency derivatives by residents and non-residents.
- RBI Master Direction on Risk Management and Inter-Bank Dealings (updated periodically), Reserve Bank of India.
- Foreign Exchange Management Act 1999 (FEMA), Ministry of Finance, Government of India.
- NSE Circular NSE/CDS/42854, Contract specifications for currency derivatives on NSE.
- SEBI (Stock Exchanges and Clearing Corporations) Regulations 2018, Schedule to Chapter IX, currency derivatives position limits.
- Zerodha support article: “Currency derivatives on Zerodha”, support.zerodha.com.
- FBIL (Financial Benchmarks India Pvt. Ltd.), USD/INR reference rate methodology, fbil.org.in.