19 October 2016

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"LEARN BEFORE YOU EARN INITATIVE"

SOMETIMES WE WONDER THAT PRICES ARE MUCH LOWER ON COMEX/NYMEX BUT ON MCX THEY ARE TRADING AT HIGHER RATES...MOST OF US DONT KNOW THE RELATIONSHIP OF MCX-COMM WITH USD.
AS ALL THE COMMODITIES INTERNATIONALLY TRADE IN USD AND HENCE CHANGE IN INR MAKES A LOT DIFFRENCE ON IT

How USDINR Impacted The Indian Commodities Market

 USDINR is the major currency pair in the Indian market which affects the price movement or price range of MCX commodities like Gold, Silver, Crude Oil, and Copper, among others.

How it’s affects price movement at MCX

For as many as nine major commodities, the price movement in India’s Multi Commodity Exchange (MCX) is not just dependent on fundamentals and technical, but is strongly linked to US Dollar/Indian Rupee (USD-INR) movements. This happens with all the international commodities traded in MCX. The value of all the commodities (Bullion, Base metals and Energy) changes as per the USD INR movements.
This phenomenon can be understood by a simple example of Crude prices. When MCX Crude touched the life time high level of Rs. 7457 per barrel on 29th of August 2013, the Crude at NYMEX traded around $ 107.66 per barrel and USDINR traded around 66.595 at the same time. Recently, the International Spot Crude touched the level of $ 80.48 per barrel i.e. approximately 25.25% correction in Crude prices in international market, meanwhile at MCX on the same day, Crude traded around Rs. 4979 and USD/INR traded around 61.30. This translates into approximately 33.23% and 7.98% downside movement in MCX Crude and USD/INR respectively.

In short, every 1% increase or decrease the value of USDINR could significantly alter prices of all the nine major international commodities traded on MCX; even if other factors remain the same.