What It Means
Currency derivatives are futures and options contracts on exchange rates, the most heavily traded being USDINR (US Dollar against the Indian Rupee). Rather than owning dollars, you're taking a view on which way the rupee will move against the dollar, and the contract settles entirely in rupees.
How It Works
A standard USDINR futures lot represents $1,000, with a tick size of ₹0.0025, so each tick moves a position's value by ₹2.50. Contracts expire monthly, two working days before the last working day of the month, and settlement is based on the RBI's reference rate published that day. NSE and BSE also list EURINR, GBPINR, and JPYINR contracts, plus cross-currency pairs like EURUSD that don't involve the rupee directly.
Example
If USDINR is trading at 87.50 and moves to 87.60 (a 10-paisa move, or 40 ticks), a long position of one lot gains ₹100 (40 ticks multiplied by ₹2.50 per tick).