Foreign Exchange
FOREIGN EXCHANGE MANAGEMENT
MEANING OF FOREIGN EXCHANGE MARKET
Foreign exchange means claims on another country held in the form of the currency or interest bearing bonds of that country i.e. converting one national currency into another country?s national currency. As per Foreign Exchange Regulation Act, 1973, foreign exchange means foreign currency and includes:
? All deposits, credits and balances payable in any foreign currency, and drafts, traveler?s cheque, letters of credit and bills of exchange, expressed or drawn in Indian currency but payable in any currency.
? Any instrument payable, at the option of the drawee or any other party thereto, either in Indian currency or in foreign currency or partly in one and partly in other.
Foreign exchange market means a market in which transactions are conducted to effect the transfer of the currency of one country into that of another. The bulk of the foreign exchange (forex) market is ?over the counter? (OTC), as there is no physical place where the participants meet to execute the deals. It is more an informal arrangement among the participants for purchasing or selling currencies, connected to each other by telecommunications like telex, telephone and a satellite communication network. In India banks are also connected to the SWIFT (Society
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