The Foreign exchange market is a market for converting the currency of one country into that of another country. An exchange rate is simply the rate at which one currency is converted into another. Without the foreign exchange market, international trade and international investment on the scale that we see today would be impossible; companies would have to resort to batter. The foreign exchange market is the lubricant that enables companies, based in countries that use different currency, to trade with each other.
International trade and investment have their risks. The rate at which one currency is converted into another can change over time. One function of foreign exchange market is to provide some insurance against the risks that arise from changes in exchange rats, commonly referred to as foreign exchange risk. Although the foreign exchange market offers some insurance against foreign exchange risk, it can not provide complete insurance it is not unusual for international businesses to suffer loses because of unpredicted changes in exchange rates currency fluctuations can make seemingly profitable trade and investment deals unprofitable, and vice versa.
[...] Expectations of the foreign exchange market FOREX SUPPLY AND DEMAND The forces that drive FX rate fluctuations are the changes in the supply and demand of currencies. Moving away from the equilibrium FX rate creates pressure on the currency to return to that rate. This pressure results in an appreciation or a depreciation of a currency. Supply of FCY comes from exports and capital inflow. Supply and demand of a nation's currency are captured in a national account called the balance of payment (BOP). [...]
[...] RBI would buy/sell US Dollars through it will enter into Dollar swaps Rupees made fully convertible on current from August 20th Foreign Exchange Management Act FEM Bill 1998, which was placed in the Parliament to replace FERA Implication of FEMA start LERMS: (The Liberalized Exchange Rate Management System) The Liberalized Exchange Rate Management System (LERMS) was introduced in March 1992, and as a result the foreign exchange market in India effectively became a two-tire one, with a dual exchange rate system in force. [...]
[...] ENHANCED ACCESS TO COMMON PERSON With the progressive liberalization in foreign exchange related transactions common person can now undertake variety of current account transactions without approaching the Reserve Bank. A large segment of population is increasingly getting connected with forex transactions of an expanding nature on individual accounts. Taking into account the day-to- day needs of common persons for undertaking various transactions, tourists for better encashment services and requests received from existing FFMCs there is a felt need for widening and rationalizing the intermediate tier of authorized persons which is licensed to undertake foreign exchange transactions to meet the day-to-day needs. [...]
[...] The Foreign Exchange Market in India now a day becomes very popular and necessary to do business with foreign market. But in compare to other country's foreign exchange, the Indian foreign exchange services are not that much fast, strong and expanded. In India the foreign exchange rules and regulations are followed by the RBI and FERA. But the procedures to convert the Indian currency in any other currency, that procedure is very long and time taking DATA COLLECTION: The task of data collection begins after a research problem has been defined. [...]
[...] To study the role of Reserve Bank of India in relation with foreign exchange market. To study the perception of the employees of the company about the foreign exchange mechanism in India through questionnaires THE RESEARCH PROBLEM: In research process, the first and foremost step happens to be that selecting and properly defining a research problem. A researcher must find the problem and formulate it so that it becomes susceptible to research. Like a medical doctor, a researcher must examine all the symptoms (presented to him or observed by him) concerning a problem before he can diagnose correctly. [...]
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