Local Business

Investor appetite for DGCX currency products continues to grow

Staff Report/Dubai
Filed on July 2, 2020

(KT file)

The Dubai Gold and Commodities Exchange (DGCX) continues to see strong investor appetite for its currencies portfolio against a backdrop of ongoing foreign exchange (FX) volatility.

In June, the DGCX's G6 currencies portfolio recorded year-on-year (Y-O-Y) volume growth of 265.56 per cent, and has now recorded year-to-date (Y-T-D) volume growth of 456.69 per cent compared to the same period last year. British Pound and Yen Futures Contracts were the most notable performers, registering Y-O-Y Average Daily Volume (ADV) growth of 307.58 per cent and 1010.45 per cent respectively.

The strong performance of the DGCX's suite of currency products comes ahead of the launch of three FX Rolling Futures Contracts, which will provide investors with additional opportunities to efficiently hedge their risk exposure, particularly during this period of heightened volatility. The three FX Rolling Futures contracts - Euro (EUR), Pound Sterling (GBP) and Australian Dollar (AUD) against the US Dollar (USD) - will go live on Monday 6 July, 2020.

Les Male, CEO of DGCX, said: "The FX market across the region has been gathering pace in recent years, but it's really come to the fore over the last few months in terms of investor appetite and maturity. This is particularly true in the UAE, which serves as a regional hub for retail and institutional traders and has solid regulatory infrastructure in place. Right now, the biggest factor influencing currency flows is of course the Pandemic and the uncertainty it's caused globally, but we're also seeing a number of other geopolitical events having a significant impact on currencies ranging from Brexit trade negotiations to concerns that the US and China trade talks may fall through again."

Following the DGCX's launch of three FX Rolling Futures Contracts next week, the DGCX plans to expand its portfolio of Indian Rupee (INR) Futures Contracts with the introduction of a Weekly INR Futures Contract against the US dollar (USD) later this month. The new contract will provide market participants with short-term hedging and arbitrage opportunities and will track the world's largest pool of offshore liquidity for exchange-traded INR-USD currency products that the DGCX offers.

"The DGCX continues to play a pioneering role in the development of MENA's financial markets. Dubai's strategic geographic location between the Far East and Europe allows us to serve as a unique hub for global Forex flows. With the launch of these new products, we hope to further enhance the UAE and wider region's rapidly growing influence and importance in the global FX market," Male added.

Total volumes on the DGCX in June totaled 948,377, valued at $23.96 billion. The DGCX last month also recorded Average Open Interest (AOI) of 145,493 contracts.

- business@khaleejtimes.com

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