India's foreign exchange market has grown significantly

Current Context: India’s foreign exchange market has experienced significant growth, driven by rising liquidity, regulatory reforms, and strong economic fundamentals. This was announced on 19th April 20250.

Key Factors Behind Growth:

• Higher Daily Turnover: The average daily turnover in India’s forex market has doubled, from USD 32 billion in 2020 to USD 60 billion in 2024.
• Forex Reserves Expansion: India’s forex reserves reached USD 677.84 billion, marking six consecutive weeks of growth, enhancing economic stability.
• Government Securities Surge: Daily trading volumes in government bonds increased 40%, touching Rs 66,000 crore, indicating strong investor confidence.
• Onshore-Offshore Market Integration: The RBI has enabled better alignment between domestic forex markets and international platforms, boosting liquidity.
• Global Factors: Growth is supported by stable domestic consumption, controlled inflation, and strong capital inflows, despite risks like global tariff changes.

Question:

Q.1 What was the average daily turnover in India’s foreign exchange market in 2024?
a) USD 32 billion
b) USD 50 billion
c) USD 60 billion
d) USD 70 billion

Answer: c) The daily turnover doubled from USD 32 billion in 2020 to USD 60 billion in 2024, reflecting higher market participation and liquidity.