Skip to main content

FOREIGN EXCHANGE MARKET - A brief

Brought to You by - Competition ZENITH
Foreign exchange market is the place where the financial institutions of different countries come and exchange the currencies in a defined manner and set rates. In forex market the deals of currencies are done and in turn it defines the value of one currency in comparison to the other (remember the hue and cry created about falling of our Rs against Uncle Sam’s dollars).



A foreign investor (FII or FDI) is a major source of foreign currency in India let us consider a situation, There is a massive downturn in the USA’s economy, an investor with bag full of dollars goes to Forex market and convert his dollars in to Rupees, then he comes to India to invest and in turn generate huge amount of profits because of cheap labour and other resources. He zeroes on Bengal as his site of operation, but whatever rosy he had heard of India evaporates in a jiffy, Didi along with her brigade stopped the move and forced the dollar man out of the state, he shifts his base to other possible alternative and loose huge amount of money due to leasing of new land, final settlement of employees in Bengal taking new licenses and clearances and adding insult to the injury was a 10lakh fine imposed on him due to environmental issues all these created a Picasso classic of bad Indian image in the foreign market, in meantime US economy shows signs of revival so the Dollarman disinvested his chunks of dollars from India and move towards uncle Sam’s backyard, it results in the loss of dollars in Indian chest.


Why India needs dollars-

Here is a case in the context –
 India has a huge demand of petrol and diesel in their economy, to buy fuels from Saudi Arabia India needs a currency that Arab accepts (same as you cannot buy milk by paying wheat anymore). Arab needs dollars to invest and purchase goods from different countries (dollar is the most accepted and sought of currency). So Indian oil companies will have to go to foreign exchange market to buy dollars with rupees.

How the rates are decided-

Now the Indian oil companies go to Forex market to buy dollars for paying fuel bills but the dollar rich institutes citing the opportunity will not release their funds this easily, as they don’t need Rs anymore (due to the unsupportive govt, Inflation and scams in India), The case is same as you fetch a drastically low prices for the junk lying inactive at your home, So this will lead in to extended round of negotiations and the past rate of 55Rs (say) against a dollar will go up to 60Rs a dollar or even more. This will in turn be a reason for rise of transport of goods in India and the final goods that used to come for 10Rs in past will jump to 12 or more hence the prise rise will strike in India leading to inflation.

FEMA(Foreign Exchange Management Act,1999)

Foreign exchange regulation in India comes under FEMA (previously FERA) , under this act RBI puts the persons who engage in foreign exchanges, who holds properties abroad and who makes payment to offshore countries under the scanner.

Comments

Popular posts from this blog

Spotting Error Quiz IV - With Explanation For SSC Exam 2015

  Hello Readers, As you know that Spotting Error types question is an important part of competitive examinations and seldom any book provide you the detailed solution. So we have decided to provide you the previous year questions of  spotting error along with the Explanation . If you like it let us know, you can also ask for detailed solutions of questions that are bothering you. 1.     I found (a)/ the two first chapters of the book (b)/ particularly interesting. (c)/ No error (d) Answer    (b) Explanation : It should be   ‘the first two chapters’ . 2.     Bacon, the father of the English easy (a) / had a thirst (b) / of knowledge (c) / No error (d) Answer    (a) Explanation : The English means the citizen of England.   Article is not used before language

English Error Spotting - Previous Year Questions of SSC CGL

Competition Zenith brings you a post on Error Spotting to boost your English for competitive exams. We are providing you the specifically chosen questions from previous year papers of SSC CGL with the best possible explanation in simplest of the language. Below are some questions with explanation: Questions 1. Have trust on(a)/God and everything(b) /will be right.(c) /(d) No error 2. The cattles (a) /are grazing (b) /in the fields.(c) /(d) No error 3. He is one of (a)/ the best novelists (b) /that has ever lived. Do you agree? (c)/no error (d) 4. On a rainy day (a) /I enjoy to watch TV (b) / with a hot cup of tea.(c ) /no error(d) 5. No sooner did (a)/I reach (b)/ Patna railway station than the train departed(c)/no error (d) 6. There is no agreement (a) / between you and I (b) /so we are free to go our way(c) /no error (d) 7. A variety of books (a) / is available in the market (b) / to help the students qualify the competitive examinations.(c) /no error 8.

Easy way to understand Direct and Indirect speech rules

Introduction. There two ways to convey a message of a person, or the words spoken by a person to other person. 1.       Direct speech 2.       Indirect speech Suppose your friend whose name is Vipul tells you in College , “I will give you a pen”. You come to home and you want to tell your brother what your friend told you. There are two ways to tell him. Direct speech:   Vipul said, “I will give you a pen”. Indirect Speech:  Vipul said that he would give me a pen. In direct speech   the original words of person are narrated (no change is made) and are enclosed in quotation mark. While in indirect speech some changes are made in original words of the person because these words have been spoken in past so the tense will change accordingly and pronoun may also be changed accordingly. In indirect speech  the statement of the person is not enclosed in quotation marks, the word “ that ” may be used before the statement to show that it is indirect sp