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    Ravi Pratap Singh Tomar
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    The document discusses the foreign exchange market, participants in the market, types of participants, factors affecting exchange rates, the role of central banks like RBI in managing exchange rates, and reforms undertaken by RBI. It notes that the foreign exchange market is a global, round-the-clock market where foreign currencies are traded. Participants include individuals, firms, banks, governments, and international agencies. Factors like inflation differentials, interest rates, current accounts, public debt, and political stability can influence exchange rates. Central banks like RBI work to ensure safety, liquidity and returns in managing a country's foreign exchange reserves and currency value.

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    intro ro forex and its importance with RBI

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    Forex.pptx

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    The document discusses the foreign exchange market, participants in the market, types of participants, factors affecting exchange rates, the role of central banks like RBI in managing exchange rates, and reforms undertaken by RBI. It notes that the foreign exchange market is a global, round-the-clock market where foreign currencies are traded. Participants include individuals, firms, banks, governments, and international agencies. Factors like inflation differentials, interest rates, current accounts, public debt, and political stability can influence exchange rates. Central banks like RBI work to ensure safety, liquidity and returns in managing a country's foreign exchange reserves and currency value.

    Copyright:

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    Download as PPTX, PDF, TXT or read online from Scribd
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    90 views9 pages

    Forex

    Uploaded by

    Ravi Pratap Singh Tomar
    The document discusses the foreign exchange market, participants in the market, types of participants, factors affecting exchange rates, the role of central banks like RBI in managing exchange rates, and reforms undertaken by RBI. It notes that the foreign exchange market is a global, round-the-clock market where foreign currencies are traded. Participants include individuals, firms, banks, governments, and international agencies. Factors like inflation differentials, interest rates, current accounts, public debt, and political stability can influence exchange rates. Central banks like RBI work to ensure safety, liquidity and returns in managing a country's foreign exchange reserves and currency value.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
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    of 9

    Foreign Exchange Market

    Market where foreign currency is trading.


    Round the clock market. Global Market. Large volume of transactions.
    Participants / Sources of transaction

    Individuals : Tourists or Migrants. Firms : Importers and Exporters. Banks : Short positions , Long position , Square Position. Government / Monetary authorities :Market Interventions International; Agencies : Lending, ADB , WB , IMF. Two Tier Market : - First tier: Ultimate customer and baker. - Between Banks

    Types Of participants

    Non-banking Entities : Business transactions and hedging. Banks : Foreign Exchange dealers. Arbitrageurs : Profit Seeking from variations in rates in different marketing. Speculator : Profit seeking from movement in exchange rates.
    Participants / Sources of transaction

    Spot Market Forward Market Derivative Markets : Currency futures and options

    Factor effecting foreign Exchange

    1. 2. 3. 4. 5. 6.

    Differentials in Inflation Differentials in Interest Rates. Current Account Deficits. Public Debt. Terms of trade. Political Stability

    Why Central Bank

    An organization having biased interest toward India. Ensuring : 1. Safety 2. Liquidity 3. Returns

    RBI
    The Reserve Bank, as the custodian of the countrys foreign exchange reserves, is vested with the responsibility of managing their investment. The legal provisions governing management of foreign exchange reserves are laid down in the Reserve Bank of India Act, 1934. The Reserve Banks reserves management function has in recent years grown both in terms of importance and sophistication for two main reasons. 1. The increasing contribution of foreign currency assets in balance sheet of RBI. 2. Increased volatility in exchange and interest rates in the global market, the task of preserving the value of reserves and obtaining a reasonable return on them has become challenging.

    Roles Of RBI
    Administrative Authority. Authorized dealers Issue of controlled directions Exchange control manual Fixation of Exchange rate Foreign investments. Foreign travel Import trade. Export of trade. Submission of return

    Reforms of RBI
    Exchange control department 1939. Introduction of Foreign Exchange Regulatory Act (FERA) 1947. Provision of fixed exchange rate of International Monitory fund (IMF) up to 1971. Amendment in FERA I 1973-1974. Introduction of Liberalized exchange rate management system (LERMS) under which dual exchange rates were fixed 1991. Full convertibility on trade account 1993-94. Withdrawal of LERMS and introduction of Managed Flexible Exchange Rate (MFER).

    Reforms of RBI (Contd..)


    Rupee made convertible in current account. Liberalization in gold movement. Opening up in international investment rate. Change of FERA to FEMA.

    MOVEMENTS
    Rise and Fall of Indian Rupee. Buying and selling of reserves. Increasing contribution of foreign exchange in balance sheet of India.

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