Mumbai: The Multi Commodity Exchange of India (MCX) will launch currency futures trading from Tuesday to become the third stock exchange in the country after the National Stock Exchange and the Bombay Stock Exchange to do so.

Initially, MCX will trade currency futures on dollar-Indian rupee platform and launch more currency pairs subsequently.

The minimum contract size of the currency futures will be 1,000. The contracts shall be settled in cash in Indian rupees and each contract will have a 12-month maturity period, an official release said here Monday.

The trading timing would be from 9 a.m. to 5 p.m. from Monday to Friday.

MCX, which has a large number of banks, corporates and brokerage houses as trading members, is expected to provide liquidity for users. Further, MCX is also expected to guarantee settlement of all transactions by eliminating counter-party risk.

"This segment will enable importers, exporters, investors, corporations and banks to hedge their currency risks at low transaction costs, and with greater transparency and safety," the statement said.

Besides large users, currency derivatives will benefit small and medium enterprises and resident Indians engaged in international trade to hedge their risks against fluctuations in currency values.

Previously, these participants had to depend on over-the-counter products such as forwards, swaps and options to hedge their currency risks.