Not everyone outside of India understands the unique legal environment pertaining to foreign exchange dealing in the country. In fact, India has some of the stricter laws in place compared to those in other developed nations where forex is a popular way for individuals to earn extra income. Here are a few of the regulations that restrict local residents in India from taking part in the full range of buying and selling opportunities:
- Citizens must use only approved brokers based on a shortlist that was created by a legislative act of government
- Indian citizens are not allowed to deal in currency pairs that are not denominated in the official currency of India
- Citizens cannot, in any case, buy or sell currency pairs that are not on an approved government list of pairs
One of the most preferred solutions for locals who want to take part in foreign exchange transactions but also want the freedom to do so quickly and without surprise fees and commissions is to use a web-based platform like WebTrader. Rather than opting for a traditional brokerage-assisted or bank-assisted method of placing orders, a website-based platform offers all kinds of advantages. Indian and non-Indian citizens who want to know more about the local legal status of this activity should educate themselves on all the key aspects of the national exchange environment, like what kind of activity is allowed, how best to trade, why the government restricts these transactions in some forms and other questions.
What Kind of Transactions are Allowed?
It’s essential to understand that the Indian government is not 100 percent restrictive in its attitude toward forex dealing. However, because the national legislative branch wants to keep a strict control over its foreign currency situation, they carefully regulate the pairs that a foreign exchange amateur or professional can buy and sell.As long as locals use registered, approved brokers and stick to the very short list of approved pairs, it’s possible to earn an income as an FX trader either part-time or full-time.
The only four pairs that someone can buy or sell are all denominated in the official Indian rupee. They are JPYINR, USDINR, GBPINR, and EURINR. What if a citizen wishes to transact a deal in JPYUSD or GBPEUR? That would technically not be allowed. However, as any relatively experienced forex enthusiast could tell you, all that’s needed is a cross-pair strategy.
Using a cross-like GBPINR and USDINR would essentially delete the effect of the INR in that transaction, thus allowing the client to deal in a restricted pair, in this case, GBPUSD. Technically it would be a legal deal but from a practical standpoint not such a good idea. For starters, there could be a major liquidity problem when doing cross transactions like that. Additionally, the doubled transaction costs would almost certainly dampen down your potential profits or magnify losses.
What is Not Legal?
Unfortunately, the list of illegal activities is much longer than the list of legal ones, especially as Indian law relates to foreign currency buying and selling. In no case are citizens, for example, allowed to use an online brokerage to do your business. They must do so through an approved local brokerage. Even allowing for this restriction, it’s still possible to take advantage of web-based apps and technology as long as the website is connected to the approved India-based organization.
Advantages of Web-Based Trading
There are dozens of reasons that market enthusiasts opt for web-based platforms to carry out their activity. Not only is it faster and more user-friendly, but there are also all sorts of charts, articles, and other educational references for new and experienced clients. These resources have the potential to help anyone sharpen their trading skills, practice the mechanics of placing orders, and more. What are the key advantages of opting for a web-based solution? Here are the main reasons that so many traders around the world prefer using the web to do business:
- Generally speaking, fees are much lower
- Trades get executed much faster and are typically placed in a more accurate manner
- Clients have access to a wide range of online tools in order to hone their skills
- Possible access to a trade simulator in order to practice realistic action with fake money
- The ability to monitor all one’s investments as they take place, i.e., in real-time
Anyone interested in trading anything, forex, shares, commodities, whatever, has a clear advantage when they choose to make their purchases and sales on a website-based platform.