Indian Foreign Exchange Market

Presenting Contents• Indian Foreign Exchange Market• Determinants of Exchange Rates• Forex Volatility• Crude Oil• Why India?

Indian Foreign Exchange Market

Regulated by the Reserve Bank of India through the Exchange Control Department

Annual turnover - $400 billion Main centre - Mumbai Other centres - Kolkata, New Delhi, Chennai, Bangalore, Pondicherry

and Cochin Regulated by the Foreign Exchange Management Act, 1999 or FEMA Until 1973 - Foreign Exchange Regulation Act ,1947 or FERA Until 1999 - Foreign Exchange Regulation Act,1973 and gradually, this

act became as FEMA

Determinants of Exchange Rates• Balance of trade • External Dept • Terms of Trade• Inflation• Interest Rates • Govt. Dept to GDP• IND Govt. External Debt

Determinants of Exchange Rates - Balance of trade

Determinants of Exchange Rates - External Dept

Determinants of Exchange Rates – Terms of Trade

Determinants of Exchange Rates - Inflation

Determinants of Exchange Rates- Interest Rates

Determinants of Exchange Rates- Govt. Dept to GDP

Determinants of Exchange Rates – IND Govt. External Debt

Determinants of Exchange Rates – Balance of Trade Comparison

Forex Volatility• Theoritical Understanding• Exchange Rate: INR_USD & INR_GBP• Volatility Comparison

Forex Volatility – Theoritical Understanding

• Devaluation and Revaluation

Devaluation refers to a purposeful or even premeditated decline in value of a currency in relation to other currencies. Most of the time, these devaluations are demanded by government entities.

• Depreciation and Appreciation

There are also occasions when the value of a foreign currency changes due to market fluctuation rather than through purposeful intervention by a government's central bank. When these occur, they are described as the currency either appreciating or depreciating.

Forex Volatility – INR_USD & INR_GBP

Forex Volatility - Comparison

Crude Oil• Demand• Price Fluctuation

Crude Oil - Demand

Crude Oil – Price Fluctuation

Should we consider India?

Why India?• Indian GDP• Present Ranking• Estimated Ranking

Why India? - Indian GDP

Why India? - Present Ranking

Why India? – Estimated Ranking

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