Globonomics!

Consulting|Technology|International business

Forex/currency markets trading not allowed in India

with 35 comments

I spoke to a couple of top investment bankers in India who said that currency trading is not allowed in India. I had written an earlier post on the Forex markets – https://ecofin.wordpress.com/2007/07/19/foreign-exchange-exposure-of-indian-it-bigwigsforward-exchange-contracts/.

There is some speculation about the Indian rupee’s full convertibility but that might not really change this policy.

I personally find this concept of currency markets quite fascinating. We did an entire course on International Financial management and I have a lot of key takeaways from my experience whilst at IIFT (Indian Institute of Foreign Trade – http://www.iift.edu) – my alma mater during my EMIB stint.

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Written by Naveen Athresh

November 23, 2007 at 9:07 pm

35 Responses

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  1. If you are interested in Forex investing then I recommend also checking out http://chapter322.biz/forex-investing/

    -Denise

    Denise

    November 28, 2007 at 2:25 am

  2. good job

    ahmed

    December 7, 2007 at 6:18 pm

  3. Trading the Forex market has become very popular in the last years. Why is it that traders around the world see the Forex market as an investment opportunity? We will try to answer this question in this article. Also we will discuss come differences between the Forex market, the stocks market and the futures market.

    Anna

    December 17, 2007 at 1:45 am

  4. Nice Blog!
    Keep up the great work!

    See my Forex Website
    http://free-forex-guide.info

    thanks,
    http://Free-Forex-Guide.info Admin

    Free Forex Guide

    December 21, 2007 at 9:44 pm

  5. very useful infrmation

    thanks

    http://www.myposts4u.blogspot.com/

    danan

    January 2, 2008 at 1:22 am

  6. happy New Year

    victor

    January 6, 2008 at 7:56 am

  7. thank god i dont live there, I dont know how i would live without my FOREX..ha ha

    Forex Investors

    January 14, 2008 at 6:16 am

  8. Forex trading is allowed by brokerage firms.

    Call me @ 9342771143.

    karan agrawal

    April 14, 2008 at 6:17 pm

  9. Forex Trading IN India may not be permitted – I don’t know. But is there any bar on trading through offshore brokerage firms ? RBI has now increased the remittance limit to $50000 also. Indians have been investing through Marketiva or similar such trading gateways. The income they earn (provided they at all do) , is I believe also exempt from I Tax . Isn’t it ?

    gautam

    April 16, 2008 at 3:36 pm

  10. Dear Gautam,

    I offer Forex Trading to indians and it’s allowed for Indian.
    As per RBI guideline:
    1.INR shall not be traded,
    2.Brokerage firm providing trading services shall not be in Jurisdiction of India.(That’s why we have founded sister concern in Spain and thro that we provide Forex Trading services)

    And,You said rightly that remittance limit has been increased i.e. More trade could be done now.

    And,,Forex Trading income is non Taxable too.

    Regards,

    Karan Agrawal

    +91.9342771143

    http://trade.altostrade.com

    Karan Agrawal

    May 23, 2008 at 7:38 pm

    • Dear Karan.

      Iam a resident of kerala,India doing forex trading for the last 1 year and am also earnign some thing around 1000usd per month. i need to know more about the income tax rules (as you said this is non taxable )for the same.could u pls forward me the details to sivaraj.t@gmail.com,pls karan plsssssssssss iam eagerly waiting for your reply

      siva

      June 18, 2010 at 9:11 pm

  11. forex trade is allowed in india for individuals, so that individuls can open account with forex brokers and he/she can trade foreign curruncies, commodities(oil, gold,silver,etc).anybody have the informations to oppose my comments, let me to know it and write here,i shall give you more details…….

    aboobacker

    June 7, 2008 at 2:41 pm

  12. i have been learning to trade with a demo account in Metatrader 4, Iam planning to open a live account soon.
    Believe the initial deposit is done by a credit card, when the profit is earned in to the live account, I am curious to know how will one manage to withdraw the earning done by the trading tool to my home country (dollar is not the native currency).

    Regards,
    FX_Rrader

    FX_trader

    June 15, 2008 at 3:56 pm

  13. Hi
    As Aboobacker said, I just have a little confusion. I am also trying to trade currency. Banks are not allowing me on the account that RBI says that you can not remit money for any kind of margin trading and currency trading comes under the same manner. Even banks are not cooperating. PLEASE advice.

    gvdelind

    June 16, 2008 at 12:53 pm

    • pls contact us. we launched a legal solution for indian retail investor who want to trade in currency and international commodity.my contact no is 07878545344

      shailesh

      August 8, 2010 at 1:37 pm

  14. hi
    Forex trading through foreign brokerage firms is not prohibited by RBI.Withdrawing funds also is not banned in India.

    Muraleedharan

    July 7, 2008 at 10:42 pm

  15. Please reade the following report by Andy Mukherjee, Bloomberg News columnist.

    May 15 2008(Bloomberg) — As India moves closer to allowing freer exchange of the home currency, bureaucratic heavy- handedness is spoiling the fun.
    On April 24, Reserve Bank of India Governor Y.V. Reddy announced that the annual limit on the amount an individual is allowed to move out of the country was being doubled to $100,000.
    Barely two weeks later, the central bank advised banks that transactions that are “in the nature of remittance for margins or margin calls to overseas exchanges/overseas counterparty are not allowed under the scheme.”
    Thus, with just a few words in fine print, the regulator shut the door on the individual Indian investor’s nascent re- entry into the international derivatives markets.
    Domestic brokerages such as Reliance Money have recently tied up with foreign partners to enable retail investors in India to tap derivatives markets overseas.
    If the increasingly liberal limit on outward remittances — the $100,000 ceiling is a 10-fold increase in 3 1/2 years — is the obvious trigger, the ban on foreign-currency remittances from being used to meet margin calls is a perfect killjoy.
    A few thousand well-to-do Indians who were beginning to speculate on the Chicago Board of Trade and other global bourses closed to them during half a century of rigid capital controls have been stopped in their tracks.
    The local media has made it quite plain what it thinks of the central bank’s move. “Let’s face it, money is fungible,” said an editorial in the Financial Express. “If there was money to be channeled through legal means, this will make sure that it will turn to illegal channels.”
    Possible Motive
    The Reserve Bank insists that it’s only upholding the law.
    Under India’s existing exchange-control rules, “trading positions are not permitted,” central bank spokeswoman Alpana Killawala said in an e-mailed response to my query. “Underlying exposure to exchange-rate, interest-rate or commodity-price risk is essential for undertaking any derivative transaction.”
    Analysts aren’t convinced.
    “For over two years now, the central bank was comfortable with individuals trading in overseas commodities,” says Avinash Raheja, senior vice president at Mumbai-based Commtrendz Risk Management Services Pvt. Ltd. “What has changed to turn the tables — and so abruptly?”
    For a possible answer, you need look no further than Dubai.
    Next month, the Dubai Gold and Commodities Exchange will start trading a futures contract on the Indian rupee. Settled in U.S. dollars, it will be the first foreign-listed derivative on the Indian currency and an extension of the non-deliverable forward market, which already exists in international financial centers.
    Losing Control
    In a controlled exchange-rate regime, which is what India has, resident individuals — and firms that buy and sell goods locally — are the kitchen sink for currency risk.
    Importers, exporters and foreign investors can all buy protection; only the small guy is stuck.
    From a central banker’s perspective, this is a convenient arrangement; from the point of view of the local individual investor, this is financial repression.
    The emergence of rupee futures in Dubai threatens the uneasy equilibrium. Resident Indians could easily use an exchange-traded futures contract — and the $100,000 outward remittance limit — to take a view on the rupee in a market over which the Reserve Bank of India has no regulatory control.
    With Indians barred from buying foreign currency to make margin payments, the danger of residents legally betting on the rupee in overseas markets has been dealt with, at least for now.
    However, this state of affairs can’t go on forever.
    Risk Management
    As long as the Reserve Bank had a tight grip on the rupee, people who didn’t have direct currency exposure could pretend they were immune to exchange-rate risk. Those days are over.
    The Reserve Bank is now too busy taming inflation to also keep a lid on the currency. The Indian rupee, the world’s third- best performer this year, has risen more than 8 percent against the U.S. dollar.
    The five-day volatility in dollar-rupee, measured as annualized standard deviation of price changes over five days, has risen to about 12 now, from 2 at the end of last year.
    Rupee derivatives are needed urgently so that “citizens and firms can do their own currency trading, and thus obtain private solutions to their own risk management problems,” says Ajay Shah, a former consultant to the Indian Finance Ministry.
    Delayed Innovation
    The Reserve Bank of India seems to grasp the need to allow access to hedging tools to a larger set of economic agents. It announced last month that domestic users and producers of base metals will be allowed to hedge their risk in global commodities markets even if they aren’t importers or exporters.
    It also revealed that a working group would be set up to study the international experience with currency futures and suggest a suitable framework to establish the market in India.
    It’s a tad too late to be debating such elementary financial innovation.
    If currency futures already existed, there would perhaps be no need to put restrictions on how individuals must use their $100,000 hard-currency entitlements. The controls will only turn some honest people into crooks, just the opposite of what good regulation ought to achieve.

    Benny

    August 2, 2008 at 7:32 pm

  16. hi,
    i wants to do index spread trading between european index futures with the help of autospreader in india is it possible to do it on own a/c & if it is how much minimum needed to do start it . also is trading in international stock markets is allowed by govt. of india.

    dhiraj sharma

    August 21, 2008 at 11:54 pm

  17. hi,
    i wants to know is allowed for an indian resident to trade in international stock markets or stock derivatives by govt. of india. if it is than i would like to do index spread arbitrage between european index futures ( for e.x between cac & dax )with the help of autospreader , can someone help me in doing it from my own a/c & the minimum deposit to open that.

    dhiraj sharma

    August 22, 2008 at 12:00 am

  18. my phone no. is +91-011-20535928 (from 9 am to 6 pm indian time ).

    dhiraj sharma

    August 22, 2008 at 12:02 am

  19. Dear All,

    For details talk to me at 9986090109.

    Karan

    Karan

    August 31, 2008 at 7:54 pm

  20. Hi,

    I plan to invest my money with secured genuine forex trading concern and expect the monthly income for my investment.

    Is it possible? Any body supports this kind of investment?

    Please advise me the secured forex trading concern for invest my money
    Regards,
    Rajan,
    Ph: 91-9600070792

    Rajan

    September 24, 2008 at 12:42 am

  21. what type of bank account do I need to trade forex from India?

    1. Savings Account
    2. current Account
    3. NRE Account
    4. foreign currency Account or any special account.

    prakash-hyderabad

    October 11, 2008 at 11:04 am

  22. SAving bank a/c or NRE A/c for individual kinda trading

    +91.986090109

    india

    karan

    November 3, 2008 at 1:27 pm

  23. +91.9986090109

    karan

    November 3, 2008 at 1:28 pm

  24. Any thing regarding consulting forex and commodity trading. contact-9874976869

    subroto

    November 9, 2008 at 10:17 pm

  25. hey!!! i am a full time forex trader and i offer 100% returns in 8 months on the capital provided for investments with me … bt most importntly i assure for no capital loss…. mail me @ fprexious@gmail.com

    forexious

    November 24, 2008 at 1:24 am

  26. hey!!! i am a full time forex trader and i offer 100% returns in 8 months on the capital provided for investments with me … bt most importntly i assure for no capital loss…. mail me @ forexious@gmail.com

    forexious

    November 24, 2008 at 1:25 am

  27. Did you know::

    Partial Filling (on of the biggest drowback of domestic market)does not happen in forex market.

    -Karan 9986090109

    karan

    February 8, 2009 at 3:19 am

  28. Check out this one..
    4xindia.com provides the best profit in the online investment world. It ensures that customers gets the latest exchange rate and profitable buy and sell.

    Forex India

    March 14, 2009 at 2:12 pm

  29. hello sir i want to jo i job with you i can send daily tips of time to time as like …
    please send me ans 09872364848 or chhabra.kanchan17@yahoo.com i have alredy 7 year exp my name is kanchan chhabra from moga

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    kanchan

    April 24, 2009 at 5:30 pm

  30. MK…

    Great free trading forex stuff here….

    MK

    May 28, 2009 at 8:38 pm

  31. I came across your site while searching on MSN and have now added you to my rss reader. I Just though i should say keep up the good work and pass on congratulations on a job well done and great advice too!

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