What is Foreign Exchange & Its Importance
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Key Takeaways: When you want to travel, invest or transfer money to and from India, you look at foreign exchange rates. So what are these rates and why are they significant? Let us find out.
What is foreign exchange?
Foreign exchange, or Forex, is the value or price of one country's currency in comparison with another. A forex rate is a rate at which you buy foreign currency and is subject to change continuously. This rate is always interpreted in currency pairs, for example, if the price of USD/INR is 74.54, then it takes INR 74.54 to buy 1 USD.
Foreign exchange and remittance
As an NRI, you often need to send money to and from India. If you have to send money to India, you would rather have a stronger INR rate, so your parents or relatives get maximum benefit. If you have an NRE account, your bank may even offer you a preferential rate on currency conversion when initiating an inward remittance to India from abroad. Similarly, when you want to repatriate funds from your NRI accounts, you need to look for better currency rates into your country of residence.
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Forex and travel
Just as the RBI controls remittances in and out of India, it also keeps a close watch on currency exchange transactions. According to the latest norms, if you're travelling to India via air, you can bring in a maximum of INR 25,000 in Indian Government-issued notes. If you're carrying foreign currency to India, there is no limit, but you do need to declare any amount higher than USD 10,000.
Final Note: It is important for you to understand foreign exchange and prevailing forex rates so that you can get a good deal when you change currency. Some premium banking propositions offer preferential rates on remittances and currency exchange. So the next time, check with your bank for better exchange rates.
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