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What is the average level of daily forex transactions involving indian rupees?

The foreign exchange market, commonly known as forex or FX, is the largest and most liquid financial market in the world. It is where currencies are bought and sold, with the aim of making a profit from the fluctuations in their exchange rates. The Indian rupee, which is the official currency of India, is one of the many currencies that are traded in this market. In this article, we will explore the average level of daily forex transactions involving the Indian rupee.

To begin with, it is worth noting that the Indian rupee is not one of the major currencies in the forex market. The major currencies include the US dollar, the Euro, the Japanese yen, and the British pound. However, this does not mean that the Indian rupee is not traded in the market. In fact, it is one of the emerging market currencies that has gained a lot of attention from investors and traders in recent years.

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According to the Reserve Bank of India (RBI), the average daily turnover of the Indian forex market was $78 billion in 2020. This includes all currencies that are traded in the market, not just the Indian rupee. However, the exact amount of daily forex transactions involving the Indian rupee is not available. This is because the forex market is decentralized, which means that there is no central exchange where all transactions are recorded.

Instead, forex transactions take place through a network of banks, brokers, and dealers who are connected electronically. These transactions are then reported to various data providers who compile the information and provide estimates of the daily turnover in the market. These estimates are based on surveys and other sources of information, and are not always accurate.

Despite the lack of precise data on the daily forex transactions involving the Indian rupee, there are some trends and factors that we can look at to get an idea of the level of activity in the market. One of these factors is the exchange rate of the Indian rupee against other major currencies.

The exchange rate of a currency is the value of one currency in terms of another currency. For example, if the exchange rate of the Indian rupee against the US dollar is 1 USD = 74 INR, it means that one US dollar can be exchanged for 74 Indian rupees. The exchange rate is determined by supply and demand in the forex market, and it fluctuates constantly.

The exchange rate of the Indian rupee has been volatile in recent years, reflecting a range of economic and political factors. For example, in 2013, the Indian rupee experienced a sharp depreciation against the US dollar, reaching a record low of 68.85 INR per USD. This was due to a combination of factors, including a widening current account deficit, rising oil prices, and concerns about the government’s economic policies.

Since then, the Indian rupee has recovered somewhat, although it remains subject to fluctuations. In 2020, the exchange rate of the Indian rupee against the US dollar ranged from a low of 74.27 INR per USD in March to a high of 76.87 INR per USD in May. This suggests that there was a significant level of forex trading involving the Indian rupee during this period.

Another factor that can give us an indication of the level of daily forex transactions involving the Indian rupee is the trading volume of Indian forex brokers. Forex brokers are intermediaries who facilitate the buying and selling of currencies in the market. They provide traders with access to the market and often offer a range of trading products and services.

According to data from the Securities and Exchange Board of India (SEBI), there are currently 37 registered forex brokers in India. These brokers reported a total trading volume of Rs. 1,50,595 crore (approximately $20 billion) in the quarter ending December 2020. This suggests that there is a significant level of forex trading activity in India, although it is not clear how much of this volume is specifically related to the Indian rupee.

In conclusion, while it is difficult to determine the exact level of daily forex transactions involving the Indian rupee, there are several factors that suggest that there is a significant level of activity in the market. The exchange rate of the Indian rupee against other major currencies has been volatile in recent years, reflecting a range of economic and political factors. In addition, the trading volume of Indian forex brokers indicates that there is a significant level of activity in the market. Overall, the Indian forex market is an important and dynamic part of the global forex market, and the Indian rupee is a currency that is increasingly attracting attention from traders and investors around the world.

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