This week we’d like to address another common query/ concern that some customers have raised in the past. Some people are interested in investing in foreign currency with the hopes of seeing the value of the currency increase in time. Although this practice is common and legal in most countries across the world, this is indeed considered illegal in India. This is because of the strict guidelines that RBI has set in place governing the purchase and sale of foreign exchange in India. The Indian Rupee is not a free currency and the exchange of Indian Rupees into other foreign currencies is only allowed for a few pre-defined RBI approved purposes. Purchase of foreign currency notes, travellers cheques and forex prepaid cards is only allowed if you’re traveling abroad and under no circumstances can these foreign exchange products be bought legally if one isn’t traveling abroad.
Sometimes customers make statements such as “But there are other foreign exchange dealers in Delhi that allow me to buy foreign currency without any travel documentation“. All we can say here is that whoever is offering to sell you currency without documentation is operating illegally. It is obviously up to the customer to decide what currency exchange company to deal with but dealing with a firm that operates illegally can have it’s own repercussions.
What about forex trading? Can one invest in currency that way? Turns out forex trading is also not allowed in India so that isn’t an option to invest in foreign currency either. The only legitimate way to invest in foreign currency in India is to open a bank account overseas and make a personal transfer of funds into the foreign bank. This facility, however, is only available to those who do indeed qualify for opening a bank account abroad and normally this type of facility is only available to residents of a foreign country.
It is also possible for one to hold on to the foreign currency upto USD 2000 (or its equivalent in another currency) bought on an international trip. This currency can then be sold anytime in the future.