IS IT LEGAL TO TRADE FOREX IN INDIA 2018?

IS IT LEGAL TO TRADE FOREX IN INDIA 2018?

If you’re a resident of India and you want to get into the world of trading forex, you may find some road blocks. In fact, one of the most commonly asked questions surrounding forex among residents of India is “Is forex a legal business or not?” The reason for this question is that there are big limitations on what assets you can trade in the forex industry when you live in India. While I’m by no means a forex legal advisor, I’ve done some research on the topic and have a good grasp of the legalities surrounding forex trading in India. With that said, here’s what you need to know: 0

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HAS THE INDIAN GOVERNMENT FORBIDDEN THE TRADING OF FOREX?

If you’re just getting started, you may feel as though it’s completely illegal to trade forex in India. However, the old saying goes, “Where there’s a will, there’s a way!” That’s the truth when it comes to the trading of currency pairs in India as well.

While the government hasn’t completely banned the trading of forex in the country, they have put some stringent restrictions on the process, as any forex legal advisors will tell you. Essentially, India has made it illegal to trade most currency pairs in the country. In fact, the only way to trade forex in India is to do so using an Indian Brokerage with access to Indian exchanges like NSE, BSE, and MCX-SX. However, these exchanges will also give you access to the only 4 tradable forex instruments in the country of India. Those include the EUR/INR, GBP/INR, JPY/INR, and USD/INR.

One thing that you’ll notice is that all tradable forex instruments in India include the Indian currency, the INR. Essentially, it is illegal to trade currency pairs that don’t include the INR in India. So, pairs like the EUR/USD, GBP/USD, and USD/JPY are all off limits. However, on these particular assets, the RBI has started to allow exchanges to offer futures contracts as well as exchange-traded currency options. . This leads to another big question among those looking to get involved in the forex trading industry in India:

WHY IS IT ILLEGAL TO TRADE FOREX PAIRS THAT DON’T INCLUDE THE INR?

At first glance, it may seem as though there is no reason for the Indian government to outlaw the trading of forex in the country. However, when we dig into the details, it becomes very clear why this was done. Once again, I want to remind you that I am not a forex legal advisor. However, to the best of my knowledge, the reason India has outlawed the trading of most currency pairs is to protect their own currency.

You see, when you trade a foreign currency pair, let’s say the EUR/USD, and you do so from India, but with non-Indian brokers, if you were to lose, you would essentially have to buy USD. This purchase would be made using RBI, India’s national currency. If too many traders were to do so, the national deficit in India would grow, causing too much of an outflow of US dollars. Essentially, this would then force the Indian government to purchase more US dollars. To do so, they would have to sell their own INR at a lower rate, essentially bringing the value of the INR down. So, India has largely outlawed the trading of forex in an attempt to protect the value of their own currency.

FINAL THOUGTHS

To answer the original question, “Is it legal to trade forex in India?”, the answer is yes. However, in order to do so, you have to do so on a very limited level, trading a limited amount of assets. Nonetheless, if you really want to trade forex, regardless of where you are, there is likely a way to do so.

This article was written for marketing purposes and does not constitute investment advice. The information in the article represents the general views of our experts and does not take into consideration the personal circumstances, investment experience or financial situation of any reader.