They may, however, arrange with their overseas branches or correspondents for transfer of surplus funds on a day to day basis to special interest bearing accounts with the facility of automatic retransfer to their current accounts.
Assessment of Foreign Exchange Market in India.
The leading foreign exchange market in India is Mumbai. Calcutta, Chennai and Delhi are the other centres accounting for bulk of the exchange dealings in India. The policy of Reserve Bank has been to decentralize exchange operations and develop more broad based exchange markets. As a result of the efforts of Reserve Bank, Cochin, Bangalore, Ahmedabad and Goa have emerged as new centres of foreign exchange market.
The business in foreign exchange markets in India has shown a steady increase as a consequence of increase in the volume of foreign trade of the country, improvement in the communications systems and greater access to the international exchange markets. Still the volume of transactions in these markets does not compare favorably with any well-developed foreign exchange market of international repute. The reasons are not far to seek. Rupee is not an internationally traded currency and is not in great demand. Much of the external trade of the country is designated in leading currencies of the world, viz., US dollar, pound-sterling and EURO. Incidentally, these are the currencies that are traded actively in the foreign exchange market in India.
The markets are situated in disadvantageous time zone i.e. when the major international markets like London and New York are closed; the Indian market opens its business. Therefore, the rates available are stale as they are one-day old. However, the growth of markets in the nearby time zones like Singapore and Hongkong has reduced to a great extent this disadvantage. As a result of these factors, the growth of foreign exchange markets in India is not to the extent that one may wish it to be.
