Consider the following statements about currency derivatives 1 It is used to hedge against currency ...........

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Consider the following statements about currency derivatives:

1.It is used to hedge against currency movements.

2.It is regulated by Forward Markets Commission.

Which of the statements given above is/are correct?

1 only

2 only

Both 1 and 2

Neither 1 nor 2

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Explanation:

It is used to hedge against currency movements: This statement is correct. Currency derivatives, such as currency futures and options, are financial instruments used by market participants to hedge against or speculate on currency movements. They provide a way to manage the risk associated with currency fluctuations.

It is regulated by Forward Markets Commission: This statement is incorrect. The regulation of currency derivatives in India is overseen by the Securities and Exchange Board of India (SEBI), not the Forward Markets Commission (FMC). The FMC was merged with SEBI in 2015, and SEBI became the regulatory authority for commodity derivatives as well.

Therefore, the correct option is 1 only.