Exchange rate in the liberalized economic environment in India: A critical study

Foreign exchange market is one of the largest traded markets across the world. This market plays a significant role in the international trade, thus, determining the strength of an economy and its growth. The market is of great significance for international finance. The growth of foreign exchange rate is enormous in India which could be gauged from the rise in the average daily foreign exchange market turnover from approximately US$ 16 billion in 2005–06 to nearly US$ 56 billion in 2015–16 so far. Foreign Exchange Market operations are governed under the Foreign Exchange Management Act (FEMA), 1999 of Government of India. This paper attempts to conceptually understand the role foreign exchange market in Indian economy with an eye on the actors that are the strong players in the scenario.