It includes business houses, international investors, and multinational corporations. They may also buy or sell currencies with a view to speculate or trade in currencies to the extent permitted by the exchange control regulations.( In India corporates can take exposures in foreign currency only if they are exposed to genuine risk on account of foreign rate movement viz. they can't take exposures for speculative purposes).
• Commercial Banks which exchange currencies to meet client requirements viz travel, dividend, remittances, capital remittances, loan remittances etc. they may operate on its own.
• Exchange brokers who facilitate in deal between the banks i.e. it facilitate the interbank transactions. They ensures that the most favorable quotation is obtained and at low cost in terms of time and money. (search for examples).
• Central bank may intervene in the market to influence the exchange rate and change it from that would result only from private supplies and demands. It may transact on its own for the above purpose or it may do so on behalf of the government when it buys or sells bonds and settles other transactions which may involve foreign exchange payments and receipts.
• Individual investors who deal in the market for transferring their remittances from one country to another. They may also deal in the market for investing their money in foreign securities.
FOREIGN EXCHANGE MARKET IN INDIA.
The forex market in India is patterned after the markets in the UK and USA. It is constituted by bankers and customers. The foreign exchange dealers never met each other but transact business through a network of telephone lines linking the banks, with exchange brokers who act, as intermediaries. .
Foreign exchange markets in India are heavily regulated by the Reserve Bank of India (RBI) and Foreign Exchange Dealers Association of India (FEDAI). The major trading currency is US Dollar/Indian rupee (USD/INR).
