final foreign exchange market of india

7/27/2019 Final Foreign Exchange Market of India

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FOREIGN EXCHANGE MARKET OF INDIA

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INTRODUCTIONS

Every country has a foreign exchange market. These markets differ from country to

country. Free operations in exchanges markets are not possible. Therefore,

exchange controls of varying intensity become a necessity in developing countries

because the markets operate under a variety of constraints. The exchange markets in

developing countries are accepted to provide more of services to the import and

export trade.

Foreign Exchange Markets in India is regulated through the exchange controls

systems instituted under Foreign Exchange Regulations Act, 1973. It empowers the

governments to assume monopoly of all exchange transactions. The foreign

exchange rates are important parts of financial analysis. Although, the exchange

rates is determined by the supply of and demand for foreign exchange the complex

forces of exports and imports are behind the whole process of exchange rates

determinations.

The Indian foreign exchange markets consist of the buyer, sellers, markets

intermediaries and the monetary authority of India. The main centre of foreign

exchange transactions in India is Mumbai, the commercial capitals of the country.

There are several other centers for foreign exchange transactions in the countryincluding Kolkata, New Delhi, Chennai, Bangalore, Pondicherry, and Cochin. In

past, due to lack of communications facilities all these markets were not linked. But

with the developments of technologies, all the foreign exchange markets of India

are working collectively.

The foreign exchange markets India is regulated by the reserve banks of India

through the Exchange Control Departments. At the same time, Foreign Exchange

Dealers Associations (voluntary associations) also provide some help in regulating

the markets.

The Authorized Dealers (Authorized by the RBI) and accredited brokers are eligible

to participate in the foreign exchange markets in India. When the foreign exchange

trade is going on between Authorized Dealers and RBI or between the Authorized

Dealers and the overseas banks, the brokers have no role to play.


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Parts from the Authorized Dealers and brokers, there are some others who are

provided with the restricted rights to accept the foreign currency or travelers

cheque. Among these, there are the authorized money changers, travels agents,

certain hotels and governments shops. The IDBI and EXIM Banks are also

permitted conditionally to hold foreign currency.

Indias Forex markets is a multi- tiered markets where the commercial banks that

quotes the domestic units against the US. Dollars are at the centre of activity. The

rupees are not quoted against any other currency in these rates discovering markets.

Businesses that need to transact in foreign currency, do so with an authorized

dealers (generally a commercial banks) as they are not permitted to deals directly

with each other.


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1.1 MEANING:

Foreign Exchange markets are markets for the purchase and sale of foreign

currencies. The need for a foreign exchange markets arises because of the presence

of the multiple currencies such as US Dollar, UK Pound and Sterling, Euro, Franc,

Yen.etc. The purchase of foreign exchange markets is to facilities internationals

trade and investments.

The foreign exchange is converted at a price called the exchange rates. Free

operations in the exchange markets are not possible. The exchange rate is

determined by the supply and the demand for foreign exchange. Foreign exchange

markets differ from country to country

The day to day business of buying and selling foreign exchanges is handled by theforeign exchange departments of RBI and authorized branches of commercial banks

in India.

Thus, a market for the purchase and sale of foreign currencies is foreign exchange

market. The objectives of these markets are to facilitate international trade and

investments. The need for a foreign exchange markets arises because of the

presences of the multiple international currencies such as US Dollars, UK Pound

final foreign exchange market of india

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