Then, after a few years, the foreign exchange reserves of the country fell. In order to address this, the Foreign Exchange Regulation Act, came into existence. FERA, however, could not be successful in restricting activities and because of this, the Rupee saw a downfall in the year The Foreign Exchange Regulation Act was repealed and replaced by the Central Government in order to keep up with the changing circumstances in the foreign exchange market.

The new act which was formulated to suit the environment prevailing in the market was the Foreign Exchange Management Act, It was enacted from June 01, The Reserve Bank of India has been active and has also laid down certain rules and regulations to govern foreign exchange trading in India.

In order to investigate the provisions of the Foreign Exchange Management Act, the Enforcement Directorate or a body of officers along with the Directorate has been appointed by the Central government. Its duty is to prevent leakage of foreign exchange which might take place due to malpractices by some. The Directorate is responsible for the detection of such cases and also for their adjudication. This authority is responsible for issuing a notice to anybody who does something which goes against the Foreign Exchange Management Act, its rules and regulations and the rules set by the Reserve Bank of India.

A person who is aggrieved by the order of the Adjudicating Authority or the Special Director can file for an appeal at the Appellate Tribunal. It was earlier known as the Exchange Control Board. It regulates the Foreign Exchange Management Act and the transactions under the current account except a few listed by the Central government.

It is not required to take permission from the RBI for the same. The banks which are authorised to deal with foreign exchange have extensive powers. Trading of foreign currencies is authorised only if undertaken through these pairs. The first four pairs have been exempted by the Financial Exchange Management Act, , which has been listed out by the Reserve Bank of India:.

By the year , the Reserve Bank of India eased its policies a bit and allowed a few i. These are as follows:. All currency trading can be carried out through National Stock Exchanges. The three main exchanges are as follows:. These brokers would further link the traders with any of the three National Stock Exchanges.

Offshore brokers that facilitate spot foreign exchange are outside the jurisdiction of India. They are not governed by SEBI and hence, a person of Indian nationality is not allowed to deal with them. Unlike in equity or stock market where you buy a share of one company, currency trading in India will involve taking a position on a currency pair. When the exchange rate rises, you sell the Euros back, and you cash in your profit.

Take the following steps to begin currency trading in India.

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Currency market in India is growing and it may be the right time to take your rightful place in this space. The currency or forex market is a decentralized worldwide market. A large currency trades involve the US dollar as one of the currencies in the currency pair. Demand and supply make the currency market work. To be a successful currency trader, you have to get your basics, goals and risk management right. Here is a list of things you should remember:.

Please keep in mind that forex trading involves a high risk of loss. Since you are dealing with a currency pair, there are more variables. But, risks are involved in any financial trade or investment. When you do currency market trading, limit the risks by never doing trading based on borrowed funds and never stretch yourself. These are the only two major risks. Like in any form of trading, there will be days when you will have more winner trades and there will be some days when you lose more.

Learn from your mistakes and use them for your success. A good way would be to keep a notebook about your trades and see where you went wrong. George Soros - George Soros rose to international fame in He is known as the trader who broke the Bank of England. He made a lot of profit from the Oct. He also made money by trading the New Zealand Dollar.

Firstly forex trading using overseas online forex broker is not permitted by RBI. Still crypto currencies not accepted by india so deposit fund in forex account through crypto currencies is not legal. Hello Mr Amol, I am grateful for your article. If i trade using funded trading account like FTMO then it is legal? Table of Contents. Related Posts. Latest Comments.

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Overseas forex trading by using online forex broker is illegal for indian. Rishit April 14, Dear Navaneeth. Decision is yours. Vamsi June 27, Riyaz June 28, Thank you for sharing. I am still not sure if I should start forex trading in india or no. Sandeep Vasudeva August 21, Jignesh Gond August 21, Hello everyone one… Till then i know 4 inr pairs and according to fema act updating Usd jpy Eur usd Gbp usd Are also allow for forex trading in India.

Jagadish November 23, GP May 5, Jaswaanth November 8, George Prethesh February 22, Can Indian citizen who work in foreign country, allowed to trade Forex? Amol Jamdar July 27, Satya October 10, Amol Jamdar October 14,