Foreign Exchange In India


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Foreign ExchangeThe whole process of the foreign exchange in India is a very complicated one. There are many reasons and factors responsible for the changes and fluctuations in the forex rates in india. Now, what actually is forex? Many people don’t understand the whole concept properly.

It is a process of exchange of one currency with another. It is the representation of the currency of a country in terms of another currency of other country. Like $1 = Rs 55.70. There are rates of different currencies in terms of the local currency in a country. The rates are determined by various factors like buying and selling of goods by another country, buying of foreign currency, etc. Even the government plays an important role in the foreign exchange. It is a very intricate and complex procedure. The various fluctuations in the forex rates are determined by the various changes in the factors which are responsible for the forex rates.

In India, forex trading is actually illegal. Yes, not many people know about it, but if someone is caught trading with the forex instruments in the forex market, he/she is charged with violation of law. It is a crime punishable by law and the punishment is imprisonment in jail. It is a very serious offence and is non-bailable.

A news was printed in the Indian Times in April, 2011 which said that forex trading is illegal in nature and is proven by the five public sectors and private sectors banks. The report published in the news paper also said that only the corporations are allowed to trade forex in India under the only condition that the corporations will use only free dollars, which means that the corporations are not allowed to convert Indian currency to US dollars for trading.

The common people and individuals are very strictly forbidden from indulging in the foreign exchange trading, as already mentioned above, it is punishable by law. They are forbidden from indulging in any form of trading, be it electronic or using the internet. There are thousands of online trading portals which offer online foreign exchange trade. These do bring high profits but they are illegal by law. The Reserve Bank of India has warned people regarding this. Any form of indulgence in this activity is punishable by law.

The Reserve Bank of India has caught some individuals using these online portals which promise huge benefits. The traders were arrested and imprisoned. Also, the Reserve Bank of India revealed that the people had to pay a certain amount for trading transactions from their own bank accounts. The agents had many different bank accounts and the people had to pay them. The Reserve Bank of India clearly mentioned after this that if any individual is caught regarding this issue, serious actions would be taken against him/ her under the FEMA, 1999. All the transactions under FEMA, 1999 like transactions related to foreign currency of any kind of forex trade are not allowed and punishable by law.

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