Foreign Exchange Market in India works under the central government in India and executes wide powers to control transactions in foreign exchange. indiaforex.com The Foreign Exchange Management Act, 1999 or FEMA regulates the whole foreign exchange market in India. Before this act was introduced, the foreign exchange market in India was regulated by the reserve bank of India through the Exchange Control Department, by the FERA or Foreign Exchange
Regulation Act, 1947. After independence, FERA was introduced as a
temporary measure to regulate the inflow of the foreign capital. But
with the economic and industrial development, the need for conservation
of foreign currency was urgently felt and on the recommendation of the
Public Accounts Committee, the Indian government passed the Foreign Exchange Regulation Act, 1973 and gradually, this act became famous as FEMA.
Factors Determining Spot Exchange Rates
1. Balance of Payments:
(2) Inflation
(3) Interest rate
(4) Money Supply
(5) National Income
(6) Resource Discoveries
(7) Capital Movements
(8) Political factors Politica
Hawala Market in India: At this juncture, it is pertinent to discuss “Hawala market” operating in India before liberalization. Before 1992, RBI was strictly controlling the exchange rate. This created a parallel foreign exchange market – a black market in foreign exchange popularly known as “Hawala Market”.
At this juncture, it is pertinent to discuss “Hawala market” operating in India before liberalization.Before 1992, RBI was strictly controlling the exchange rate. This created a parallel foreign exchange market – a black market in foreign exchange popularly known as “Hawala Market”.
Hawala market is nothing but illegal foreign exchange market where forex trading happen at rates different than the rate mandated by the RBI. When the official rate “overvalues” the home currency, Hawala market starts operating.
Factors Determining Spot Exchange Rates
1. Balance of Payments:
(2) Inflation
(3) Interest rate
(4) Money Supply
(5) National Income
(6) Resource Discoveries
(7) Capital Movements
(8) Political factors Politica
Hawala Market in India: At this juncture, it is pertinent to discuss “Hawala market” operating in India before liberalization. Before 1992, RBI was strictly controlling the exchange rate. This created a parallel foreign exchange market – a black market in foreign exchange popularly known as “Hawala Market”.
At this juncture, it is pertinent to discuss “Hawala market” operating in India before liberalization.Before 1992, RBI was strictly controlling the exchange rate. This created a parallel foreign exchange market – a black market in foreign exchange popularly known as “Hawala Market”.
Hawala market is nothing but illegal foreign exchange market where forex trading happen at rates different than the rate mandated by the RBI. When the official rate “overvalues” the home currency, Hawala market starts operating.
