Emerging trends in forex markets in India Venkatesan T.* *Faculty of Management Studies, Department of Management Studies, E.S College of Engineering and Technology, Villupuram-605602, Tamilnadu, India Online published on 21 September, 2017. Abstract During 2003–04 the average monthly turnover in the Indian foreign exchange market touched about 175 billion US dollars. Compare this with the monthly trading volume of about 120 billion US dollars for all cash, derivatives and debt instruments put together in the country, and the sheer size of the foreign exchange market becomes evident. The foreign exchange market activity has more than doubled with the average monthly turnover reaching 359 billion USD in 2005–2006, over ten times the daily turnover of the Bombay Stock Exchange. As in the rest of the world, in India too foreign exchange constitutes the largest financial market by far. Liberalization has radically changed India's foreign exchange sector. Indeed the liberalization process itself was sparked by a severe Balance of Payments and foreign exchange crisis. Since 1991, the rigid, four-decade old, fixed exchange rate system. Replete with severe import and foreign exchange controls and a thriving black market is being replaced with a less regulated, "market driven" arrangement. While the rupee is still far from being "fully floating" (many studies indicate that the effective pegging is no less marked after the reforms than before), the nature of intervention and range of independence tolerated have both undergone significant changes. With an overabundance of foreign exchange reserves, imports are no longer viewed with fear and scepticism. The Reserve Bank of India and its allies now intervene occasionally in the foreign exchange markets not always to support the rupee but often to avoid an appreciation in its value. Full convertibility of the rupee is clearly visible in the horizon. The effects of these developments are palpable in the explosive growth in the foreign exchange market in India. Top Keywords Introduction, Foreign Currency Exchange Policy of RBI, Forex Facilities for Residents (Individuals), Main Forex market participants, Growth of the foreign exchange market, Trends in Forex market, Indian Rupee-US Dollar, The Dynamics of Swelling Reserves. Top |