Foreign exchange is a crucial component in international trade. Your bank facilitates the transfer of monies in different currencies in a seamless fashion – this article examines the utility of good forex trade.
For most of us, the term forex exchange comes into play only when we are leaving for a foreign trip and need to exchange our INR for foreign currency. However, forex for a holiday is just a small component of the complex, global forex market. It is used daily for international trade.
What is foreign exchange trading?
Unlike other markets, the forex exchange trading space does not have a physical market arena. It is a virtual space where two different currencies are traded at a certain rate determined at the start of the business day. Two or more currencies are traded in order to facilitate business between different countries. Meanwhile, forex services in India also cater to tourists wishing to exchange their INR for foreign currency.
The forex exchange rate is a crucial factor in the forex market. It determines the profitability of the exchange, and is dependent on the value of the participating currencies at the time of the exchange.
Why you need to understand exchange rates and forex, in general
The global forex exchange market is one of the largest, most volatile financial markets in the world. It trades huge volumes of money daily, via banks and private brokers. The trading is done electronically between banks and traders across different time zones. The forex exchange rates differ from day to day, and they can change dramatically in response to sudden world events like wars, or deaths of global leaders, etc.
- You might not be equipped to track every fluctuation in the forex market, but understanding how the market works helps you get the best value for your currency. Every time you exchange your domestic currency for a foreign one, you are trading one currency against another for a base price. Your broker or trading bank can advise you on the best times to trade the currency so that you can get the best forex exchange rate for your money.
- Leading Indian banks are best equipped to handle your forex exchange requirements, whether you need the currency for business or for a trip abroad. The best banks offer real time data on the latest currency trends, and they have the pulse of the global markets at all times. Besides, banks offer tried and tested forex rates methodologies to help you trade more efficiently.
- Leading banks in India also offer specialised inputs for international trade finance, by handling functions like FDI, FCGPR (including APR submissions, reporting guidelines, regulatory submissions, etc.)
- The bank also conducts regular market study and looks at new trends and expert insights that help you get the most profitability out of the transaction
- Some of India’s leading banks also offer other foreign currency exchange services like remittance and equity transactions.