A Discussion On Forex Market History In India

The foreign exchange currency trading in India is growing at a really good pace however it is said that the forex
market is still in the early phase in India. Nevertheless there are already several big players in the Indian forex
market. Let us find out details on the forex market history in India to know more about Indian forex market.
The history of forex market in India owes its origin to an important decision taken by the Reserve Bank of India
(RBI) in the year 1978 which allows banks to undertake intra-day trading in foreign currency exchange. As a
result of this step, the agreement of maintaining square or near square position was to be complied with only at
the close of business every day. The history of currency trading in India also clearly shows that during the initial
period when these economic reforms started, the exchange rate of national currency i.e. Indian rupee used to be
determined by the RBI in terms of a weighted basket of currencies of Indias major trading partners. Moreover,
there were some fairly significant restrictions on the current account transactions.
Then again during early nineties, more economic reforms were introduced which witnessed the important twostep downward adjustment in the exchange rate of the Indian rupee in order to place it at a suitable level in line
with the inflation differential so that the competitiveness in exports could be maintained. With these economic
reforms which resulted in the unification exchange rate of the rupee heralded the commencement of the new era
of market determined forex currency rate regime of rupee in the Indian forex history which was based on the
demand and supply principle in the forex market.
Another landmark in Forex history of India came with the appointment of an Expert Group committee on Forex
currency in 1994. This committee was made to study the forex market in detail so that step can be taken out to
develop, deepen and widen the forex market in India. The result of this exercise was that banks were significant
freedom in many of its market operations related to like forex market development and liberalization. The freedom
was granted to banks in term of fixing their trading limits, allowed to borrow and invest funds in the overseas
markets up to specified limits, accorded freedom to make use of derivative products for asset-liability
management purposes.
The corporate were granted the flexibility to book forward cover based on previous turnover and were given
freedom to make use of financial instruments like interest rates and currency swaps in the international currency
exchange market. The other feature of forex history in India is that a large sum of foreign exchange in India came
through the large Indian population working in foreign countries. However, the common man was not much
interested in forex trading. the things are changing now and with the growing economy more and more people are
showing interest in forex trading and are looking out for hedging currency risks.
National Stock Exchange of India popularly known as NSE was the first recognized exchange in Indian forex
history to launch forex currency futures trading in India. These currency futures are beneficial over overseas forex
trading especially to comparatively small traders and retail investors. Another important point to know is that
before discussing the history of forex market in India, it is important to know the central government of India has
the powers to control transactions in foreign exchange and hence forex transactions in India are managed by the
government authorities.

Forex Market History In China

The forex market history in China can be dated back to the early 19th century. In the process of blind
development of future markets in 1993, a number of forex brokers from Hong Kong arrived in China to carry out
forex futures trading. This attracts a large number of domestic enterprises and individuals in China.
The majority of participants does not understand the domestic forex market and participates in the market blindly.
This leads to a lot of loss, including a large number of state-owned enterprises. However, at the end of 1993,
Peoples Bank of China allowed domestic banks to carry out the forex trading of individual-oriented firm offer. The
forex history in China shared in this article will let you know more about the forex market.

History of forex market in China actually can be traced back to 1999 when some investor began to enter forex
market. Then, domestic firm offer trading has gradually become a new kind of investment and been into the rapid
development stage. Forex market is more regulated as compared with stock market, so firm offer trading ran by
domestic banks has attracted more and more participants.
Today, Chinas foreign exchange reserves reach up to 2.13 trillion dollars. The reserves, already the world's
largest, grew by 185.6 billion dollars in the first six months of 2009. China 's real estate market has rebounded, at
the same times attracts overseas investors who are allocating capital. In recent years, China is becoming more
attractive to foreign investors, which leads to capital inflows.
History of currency trading in China shared in the above article will help you know more about the development in
forex market.

At the start of the reform era at the end of 1978, China's foreign exchange reserves
were minimal, but enough to cover the requirements of a country with a very
small import bill.
In the early 1980s, export growth contributed to an initial rise in reserves to a peak of
US$17.4bn by 1984. High trade deficits in 1985 and 1986 eroded the reserves in those
years.
In 1987 the surplus on trade in services slightly exceeded the merchandise trade deficit,
producing a small current-account surplus, and a comfortable net capital inflow helped
push up reserves to US$16.3bn. The reserves were held above this level for another two
years.
The economic slowdown of 1989-91 produced a sharp fall in imports in 1990, while
exports continued to rise, producing a merchandise trade surplus for that year of
US$9.2bn, which was gradually eroded in the next three years as imports rose faster
than exports. By 1993 the trade and current accounts were in deficit, but the
acceleration in inward FDI flows kept foreign exchange reserves rising for most of the
rest of the decade.
Joining the World Trade Organisation (WTO) in 2001 contributed to rapid growth in
imports, but exports also expanded at a fast pace, while FDI inflows exceeded US$60
billion a year by 2004-2006.
In October 2006, China's foreign exchange reserves exceeded USD1 trillion for the first
time.
By the end of September 2008, the reserves topped USD 1.9 trillion, equal to nearly
USD1,500 per head for the entire population of China.
It remained around this level until the end of 2008 as trade growth slowed and foreign
investment inflows declined.
The onward march resumed in 2009 and by September 2011 foreign-exchange reserves
had reached USD 3.2 trillion, where they remained for the rest of the year and until
2014, when the reserves fluctuated during the year not far below the USD 4 trillion level.