The Hindu Business Line : Forex turnover rises to $34 b

Mumbai, Sept. 26 Strong economic growth and liberalisation of banking and foreign exchange norms have helped the country’s total foreign exchange turnover increase from $ 2 billion in April 1998 to $ 34 billion in April 2007.

According to data released by the Bank for International Settlement, India’s share in foreign exchange market has increased from 0.1 per cent in 1998 to 0.9 per cent in 2007.

“The trade and capital flows have ballooned and there has been an increasing integration in the global economy. The relaxation of norms has also conttributed to the growth in the forex turnover,” said Mr K Harihar, Executive Vice-President, Head-Treasury and Financial Institutions, Development Credit Bank.

The data includes details of spot trades, outright forwards, forex swaps and cross currency trading. All of these have shown substantial increase in volumes said, Mr Sudhir Joshi, treasurer, HDFC Bank.

The increase in forex turnover also includes the increase in capital flows from foreign institutional investors, foreign direct investment and private equity, pointed out Mr Harihar.

The bigger share of the forex turnover is with foreign banks, followed by Indian private banks, said bank officials. This is because the foreign banks get flows from their overseas offices. Private Indian banks have better marketing of products, said Mr Joshi. Among the public sector banks, those that have flows from the RBI would benefit more than others.

“Foreign banks play a key role when it comes to ECBs, while the government undertakings are mainly handled by the major nationalised banks,” Mr Harihar said.