Due to its highly competitive existence and liquidity, forex trading has become one of the most common trading ways. Before 2015, there were various forex trade restrictions in India, but these restrictions are no longer as extreme. Many who are unsure about the legality of forex trading in India should continue reading to learn more about it in-depth and clear up any questions they may have.
Let us first attempt to grasp what forex dealing entails.
What Is Forex Trading?
The term Forex is made up of two words: foreign and exchange. Forex trading is the practice of merchants worldwide trading currency pairs on the foreign exchange market. It’s also known as foreign exchange trading by others.
Currency pairs are chosen and translated into one another in Forex dealing for several purposes, including banking, transport, and tourism. The EUR/USD pair is the most well-known currency pair in the world.
Because of the internet, forex trading has become relatively easy. Only international corporations and hedge funds were willing to exchange currencies before that.
Who Can Trade In Forex Market?
Almost everyone can now begin forex trading. The foreign exchange market is so involved and liquid that it performs regular trading worth $5 trillion in all currencies. Owing to various reasons, such as inflation and conflicts, certain currencies are considered highly unpredictable. The Iranian rial is an example of a volatile currency. On the other hand, certain currencies, such as the Swiss franc, are resilient thanks to the country’s strong economic conditions in which they are distributed. Traders are known to trade in risky currency pairs like the AUD/USD to make fast money by going short on their purchases.
Forex Trading In India Is Legal or Illegal?
The most often asked question about forex trade in India is whether it is legitimate or not. Yeah, that is the easy answer to that question. You can lawfully exchange Forex from anywhere in the world. Many Indian traders use forex trading to make good money, which has become an essential part of their lives. It should be noted, however, that retail forex traders in India have certain limitations.
That means you can only deal on Indian markets and with Indian forex instruments. These instruments have drawbacks in that they only provide currency pairs that are-
USD/INR: The pairing of the US dollar with the Indian rupee.
GBP/INR: The exchange rate between the British pound sterling and the Indian rupee.
JPY/INR: The exchange rate between the Japanese yen and the Indian rupee.
EUR/INR: is the exchange rate between the European euro and the Indian rupee.
Furthermore, India’s Foreign Exchange Management Act makes the trade of any non-INR pair, that is, any pairing that does not include the Indian rupee, unlawful.
Corporations and Forex Trading
The banks’ notes on the evidence have stated that only companies are permitted to trade, with the provision that the corporations use only free dollars from their deposits. Free dollar use means they cannot exchange Indian currency for dollars and only trade with the converted dollars. Furthermore, they have been trained to use a leverage of fewer than ten times.