Currency trading is extremely popular nowadays. Many people see it as one of the best ways to earn money online – but only if people research the market. The currency trading market is expected to keep on growing in the future, as more and more people join it every single day.
But, can people in India join it and start trading currency? Let’s take a look at the legality of Forex in India!
The Legality of Forex Trading Worldwide
This type of trading is completely banned in little to no countries. However, the number of countries that impose no restriction on Forex is not that big either. Why?
Well, because quite a few countries restrict the way people trade currency. In an attempt to protect their economy and currency outflow, governments made it difficult for citizens to fully enjoy trading.
On top of that, many countries require Forex brokers to be regulated by government agencies. This is why, if you check this OctaFX review, you may find out that you cannot trade with them if your country allows trade with regulated brokers only.
The Legality of Forex in India
This country is part of the latter example. Namely, its government has imposed restrictions on how its citizens are able to trade Forex. In short, it is 100% legal to trade Forex here, as long as you respect the terms and regulations in place.
They are, as follows:
- Only MCX-SX, NSE, and BSE can be used for trading Forex on Indian territory. They are national exchanges and are authorized by the government to provide traders with the tools they need to trade.
- Indians can currently trade only with INR currency pairs. Trading with international pairs is currently illegal. Also, there are four foreign currencies available for pairing with INR – namely Japanese Yen, British Pound, Dollar, and Euro.
- Basically, the international foreign retail exchange is not allowed in India.
Aspects of Indian Forex Trading
The Forex market is known as being completely decentralized – free for everyone. This makes it easier for people to buy any type of currency they want and when they want – and sell it as well.
However, the country’s government sees this characteristic as a threat to the country’s economic power and currency outflow. As such, they limit and restrict currency trading.
Currency Trading in India
Trading Forex legally in this country means the need to use an Indian broker. They have available the allowed currency pairs and provide traders with tools that are pre-restricted to comply with the country’s laws. In short, you can’t go wrong with an Indian broker when trading currency in India.
One could attempt trading USD-INR and EUR-INR, eliminate the national currency, and eventually trade USD to EUR. However, the fees and decreased liquidity would make that this type of trading is rather unprofitable.
The Bottom Line
Many countries experience Forex restrictions. This is because their particular governments either want to have full power over the country’s economy or want to stop the currency’s outflow, as is the case with India.
Moreover, the illegal types of trading in India also make for non-bailable offenses. It is most useful if you don’t try to go around the laws and attempt any kind of illegal trading.
Ultimately, the good news is that the country may have to lessen its trading restrictions in the future, as it is a service exporting country.
