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Is making money by buying and selling foreign currency legal?
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up vote
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favorite
Can a person buy a foreign currency using the currency of their own country, and then sell it when their currency's value goes down?
Say, I exchanged 44,820 INR for 1,000 USD in 2010, when 44.82 INR = 1 USD. Now that the value of the INR has fallen, I can exchange this 1,000 USD for 72,300 INR. Essentially I have made of profit of 27,480 INR in 8 years doing nothing.
Is this method legal? Are there people who use this method to make money?
india foreign-exchange
edited 9 mins ago
blahdiblah
23515
asked 10 hours ago
user5011
14815
New contributor
user5011 is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
add a comment |Â
up vote
9
down vote
favorite
Can a person buy a foreign currency using the currency of their own country, and then sell it when their currency's value goes down?
Say, I exchanged 44,820 INR for 1,000 USD in 2010, when 44.82 INR = 1 USD. Now that the value of the INR has fallen, I can exchange this 1,000 USD for 72,300 INR. Essentially I have made of profit of 27,480 INR in 8 years doing nothing.
Is this method legal? Are there people who use this method to make money?
india foreign-exchange
edited 9 mins ago
blahdiblah
23515
asked 10 hours ago
user5011
14815
New contributor
user5011 is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
1
What was the inflation rate in India from 2010 until now? The consumer price index rose from about 90 in 2010 to 140 now Your 44,000 INR then is actually worth about the same as 68,000 INR now, in the sense that it will buy the same amount of "stuff". If that is the case, you have really made hardly any "profit" at all - only the difference between 72,000 and 68,000.
– alephzero
4 hours ago
2
@user5011 - this QA may cause come confusion because (1) in most countries, this is utterly legal and normal, and very many people do it all the time as a matter of course (2) however if you're writing from India - it's actually illegal in India!!
– Fattie
3 hours ago
add a comment |Â
up vote
9
down vote
favorite
up vote
9
down vote
favorite
Can a person buy a foreign currency using the currency of their own country, and then sell it when their currency's value goes down?
Say, I exchanged 44,820 INR for 1,000 USD in 2010, when 44.82 INR = 1 USD. Now that the value of the INR has fallen, I can exchange this 1,000 USD for 72,300 INR. Essentially I have made of profit of 27,480 INR in 8 years doing nothing.
Is this method legal? Are there people who use this method to make money?
india foreign-exchange
edited 9 mins ago
blahdiblah
23515
asked 10 hours ago
user5011
14815
New contributor
user5011 is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
Can a person buy a foreign currency using the currency of their own country, and then sell it when their currency's value goes down?
Say, I exchanged 44,820 INR for 1,000 USD in 2010, when 44.82 INR = 1 USD. Now that the value of the INR has fallen, I can exchange this 1,000 USD for 72,300 INR. Essentially I have made of profit of 27,480 INR in 8 years doing nothing.
Is this method legal? Are there people who use this method to make money?
india foreign-exchange
india foreign-exchange
edited 9 mins ago
blahdiblah
23515
asked 10 hours ago
user5011
14815
New contributor
user5011 is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
edited 9 mins ago
blahdiblah
23515
asked 10 hours ago
user5011
14815
New contributor
user5011 is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
edited 9 mins ago
blahdiblah
23515
edited 9 mins ago
blahdiblah
23515
edited 9 mins ago
blahdiblah
23515
23515
asked 10 hours ago
user5011
14815
New contributor
user5011 is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
asked 10 hours ago
user5011
14815
asked 10 hours ago
user5011
14815
14815
New contributor
user5011 is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
New contributor
user5011 is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
user5011 is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
1
What was the inflation rate in India from 2010 until now? The consumer price index rose from about 90 in 2010 to 140 now Your 44,000 INR then is actually worth about the same as 68,000 INR now, in the sense that it will buy the same amount of "stuff". If that is the case, you have really made hardly any "profit" at all - only the difference between 72,000 and 68,000.
– alephzero
4 hours ago
2
@user5011 - this QA may cause come confusion because (1) in most countries, this is utterly legal and normal, and very many people do it all the time as a matter of course (2) however if you're writing from India - it's actually illegal in India!!
– Fattie
3 hours ago
add a comment |Â
1
What was the inflation rate in India from 2010 until now? The consumer price index rose from about 90 in 2010 to 140 now Your 44,000 INR then is actually worth about the same as 68,000 INR now, in the sense that it will buy the same amount of "stuff". If that is the case, you have really made hardly any "profit" at all - only the difference between 72,000 and 68,000.
– alephzero
4 hours ago
2
@user5011 - this QA may cause come confusion because (1) in most countries, this is utterly legal and normal, and very many people do it all the time as a matter of course (2) however if you're writing from India - it's actually illegal in India!!
– Fattie
3 hours ago
1
1
What was the inflation rate in India from 2010 until now? The consumer price index rose from about 90 in 2010 to 140 now Your 44,000 INR then is actually worth about the same as 68,000 INR now, in the sense that it will buy the same amount of "stuff". If that is the case, you have really made hardly any "profit" at all - only the difference between 72,000 and 68,000.
– alephzero
4 hours ago
What was the inflation rate in India from 2010 until now? The consumer price index rose from about 90 in 2010 to 140 now Your 44,000 INR then is actually worth about the same as 68,000 INR now, in the sense that it will buy the same amount of "stuff". If that is the case, you have really made hardly any "profit" at all - only the difference between 72,000 and 68,000.
– alephzero
4 hours ago
2
2
@user5011 - this QA may cause come confusion because (1) in most countries, this is utterly legal and normal, and very many people do it all the time as a matter of course (2) however if you're writing from India - it's actually illegal in India!!
– Fattie
3 hours ago
@user5011 - this QA may cause come confusion because (1) in most countries, this is utterly legal and normal, and very many people do it all the time as a matter of course (2) however if you're writing from India - it's actually illegal in India!!
– Fattie
3 hours ago
add a comment |Â
2 Answers
2
active
oldest
votes
up vote
13
down vote
accepted
Is this method legal? Are there people who use this method to make money?
This depends on the intent. As per Foreign Exchange Management Act, an individual cannot trade in FX. There are specific licenses required and governed by Reserve Bank of India.
However one can hold small amount of Foreign currency in cash; and can make the prescribed profit like you mentioned.
I exchanged 44,820 INR for 1,000 USD in 2010, when 44.82 INR = 1 USD. Now that the value of the INR has fallen, I can exchange this 1,000 USD for 72,300 INR
You have factor inflation and other investment opportunities that would have resulted in similar returns. i.e. Fixed Deposit rates were around 10% in 2010.
answered 10 hours ago
Dheer
47.5k958140
2
What stops an Indian from just using a not in india forex broker?
– TomTom
5 hours ago
1
@TomTom Nothing much. However every remittance of FX outside India is reported. Remittance for studies etc is allowed, one can give false undertaking...
– Dheer
4 hours ago
add a comment |Â
up vote
6
down vote
I'll answer your two questions in reverse order:
Are there people who use this method to make money?
Yes, definitely. This is called currency trading, and many people and funds do that. You basically make a bet on the evolution of a currency pair, like you would bet on the price of a company stock going up, or on the price of a property going up, etc.
The best known currency trader is probably George Soros with this Quantum Fund, and his bet against the British Pound, in which he made over $1 billion. There are a few other similar examples.
Is this method legal?
This depends a lot on where you are. Some countries have very strict currency controls (you can't exchange your local currency for foreign currency without a lot of justification), others are very liberal and let you do anything, while others still are somewhere in between.
Some countries will also require you to hold some form of licence or authorisation if you want to do that for a living.
answered 4 hours ago
jcaron
1,0061415
1
The question is tagged "india".
– Barmar
24 mins ago
add a comment |Â
2 Answers
2
active
oldest
votes
2 Answers
2
active
oldest
votes
active
oldest
votes
active
oldest
votes
up vote
13
down vote
accepted
Is this method legal? Are there people who use this method to make money?
This depends on the intent. As per Foreign Exchange Management Act, an individual cannot trade in FX. There are specific licenses required and governed by Reserve Bank of India.
However one can hold small amount of Foreign currency in cash; and can make the prescribed profit like you mentioned.
I exchanged 44,820 INR for 1,000 USD in 2010, when 44.82 INR = 1 USD. Now that the value of the INR has fallen, I can exchange this 1,000 USD for 72,300 INR
You have factor inflation and other investment opportunities that would have resulted in similar returns. i.e. Fixed Deposit rates were around 10% in 2010.
answered 10 hours ago
Dheer
47.5k958140
2
What stops an Indian from just using a not in india forex broker?
– TomTom
5 hours ago
1
@TomTom Nothing much. However every remittance of FX outside India is reported. Remittance for studies etc is allowed, one can give false undertaking...
– Dheer
4 hours ago
add a comment |Â
up vote
13
down vote
accepted
Is this method legal? Are there people who use this method to make money?
This depends on the intent. As per Foreign Exchange Management Act, an individual cannot trade in FX. There are specific licenses required and governed by Reserve Bank of India.
However one can hold small amount of Foreign currency in cash; and can make the prescribed profit like you mentioned.
I exchanged 44,820 INR for 1,000 USD in 2010, when 44.82 INR = 1 USD. Now that the value of the INR has fallen, I can exchange this 1,000 USD for 72,300 INR
You have factor inflation and other investment opportunities that would have resulted in similar returns. i.e. Fixed Deposit rates were around 10% in 2010.
answered 10 hours ago
Dheer
47.5k958140
2
What stops an Indian from just using a not in india forex broker?
– TomTom
5 hours ago
1
@TomTom Nothing much. However every remittance of FX outside India is reported. Remittance for studies etc is allowed, one can give false undertaking...
– Dheer
4 hours ago
add a comment |Â
up vote
13
down vote
accepted
up vote
13
down vote
accepted
Is this method legal? Are there people who use this method to make money?
This depends on the intent. As per Foreign Exchange Management Act, an individual cannot trade in FX. There are specific licenses required and governed by Reserve Bank of India.
However one can hold small amount of Foreign currency in cash; and can make the prescribed profit like you mentioned.
I exchanged 44,820 INR for 1,000 USD in 2010, when 44.82 INR = 1 USD. Now that the value of the INR has fallen, I can exchange this 1,000 USD for 72,300 INR
You have factor inflation and other investment opportunities that would have resulted in similar returns. i.e. Fixed Deposit rates were around 10% in 2010.
answered 10 hours ago
Dheer
47.5k958140
Is this method legal? Are there people who use this method to make money?
This depends on the intent. As per Foreign Exchange Management Act, an individual cannot trade in FX. There are specific licenses required and governed by Reserve Bank of India.
However one can hold small amount of Foreign currency in cash; and can make the prescribed profit like you mentioned.
I exchanged 44,820 INR for 1,000 USD in 2010, when 44.82 INR = 1 USD. Now that the value of the INR has fallen, I can exchange this 1,000 USD for 72,300 INR
You have factor inflation and other investment opportunities that would have resulted in similar returns. i.e. Fixed Deposit rates were around 10% in 2010.
answered 10 hours ago
Dheer
47.5k958140
answered 10 hours ago
Dheer
47.5k958140
answered 10 hours ago
Dheer
47.5k958140
answered 10 hours ago
Dheer
47.5k958140
47.5k958140
2
What stops an Indian from just using a not in india forex broker?
– TomTom
5 hours ago
1
@TomTom Nothing much. However every remittance of FX outside India is reported. Remittance for studies etc is allowed, one can give false undertaking...
– Dheer
4 hours ago
add a comment |Â
2
What stops an Indian from just using a not in india forex broker?
– TomTom
5 hours ago
1
@TomTom Nothing much. However every remittance of FX outside India is reported. Remittance for studies etc is allowed, one can give false undertaking...
– Dheer
4 hours ago
2
2
What stops an Indian from just using a not in india forex broker?
– TomTom
5 hours ago
What stops an Indian from just using a not in india forex broker?
– TomTom
5 hours ago
1
1
@TomTom Nothing much. However every remittance of FX outside India is reported. Remittance for studies etc is allowed, one can give false undertaking...
– Dheer
4 hours ago
@TomTom Nothing much. However every remittance of FX outside India is reported. Remittance for studies etc is allowed, one can give false undertaking...
– Dheer
4 hours ago
add a comment |Â
up vote
6
down vote
I'll answer your two questions in reverse order:
Are there people who use this method to make money?
Yes, definitely. This is called currency trading, and many people and funds do that. You basically make a bet on the evolution of a currency pair, like you would bet on the price of a company stock going up, or on the price of a property going up, etc.
The best known currency trader is probably George Soros with this Quantum Fund, and his bet against the British Pound, in which he made over $1 billion. There are a few other similar examples.
Is this method legal?
This depends a lot on where you are. Some countries have very strict currency controls (you can't exchange your local currency for foreign currency without a lot of justification), others are very liberal and let you do anything, while others still are somewhere in between.
Some countries will also require you to hold some form of licence or authorisation if you want to do that for a living.
answered 4 hours ago
jcaron
1,0061415
1
The question is tagged "india".
– Barmar
24 mins ago
add a comment |Â
up vote
6
down vote
I'll answer your two questions in reverse order:
Are there people who use this method to make money?
Yes, definitely. This is called currency trading, and many people and funds do that. You basically make a bet on the evolution of a currency pair, like you would bet on the price of a company stock going up, or on the price of a property going up, etc.
The best known currency trader is probably George Soros with this Quantum Fund, and his bet against the British Pound, in which he made over $1 billion. There are a few other similar examples.
Is this method legal?
This depends a lot on where you are. Some countries have very strict currency controls (you can't exchange your local currency for foreign currency without a lot of justification), others are very liberal and let you do anything, while others still are somewhere in between.
Some countries will also require you to hold some form of licence or authorisation if you want to do that for a living.
answered 4 hours ago
jcaron
1,0061415
1
The question is tagged "india".
– Barmar
24 mins ago
add a comment |Â
up vote
6
down vote
up vote
6
down vote
I'll answer your two questions in reverse order:
Are there people who use this method to make money?
Yes, definitely. This is called currency trading, and many people and funds do that. You basically make a bet on the evolution of a currency pair, like you would bet on the price of a company stock going up, or on the price of a property going up, etc.
The best known currency trader is probably George Soros with this Quantum Fund, and his bet against the British Pound, in which he made over $1 billion. There are a few other similar examples.
Is this method legal?
This depends a lot on where you are. Some countries have very strict currency controls (you can't exchange your local currency for foreign currency without a lot of justification), others are very liberal and let you do anything, while others still are somewhere in between.
Some countries will also require you to hold some form of licence or authorisation if you want to do that for a living.
answered 4 hours ago
jcaron
1,0061415
I'll answer your two questions in reverse order:
Are there people who use this method to make money?
Yes, definitely. This is called currency trading, and many people and funds do that. You basically make a bet on the evolution of a currency pair, like you would bet on the price of a company stock going up, or on the price of a property going up, etc.
The best known currency trader is probably George Soros with this Quantum Fund, and his bet against the British Pound, in which he made over $1 billion. There are a few other similar examples.
Is this method legal?
This depends a lot on where you are. Some countries have very strict currency controls (you can't exchange your local currency for foreign currency without a lot of justification), others are very liberal and let you do anything, while others still are somewhere in between.
Some countries will also require you to hold some form of licence or authorisation if you want to do that for a living.
answered 4 hours ago
jcaron
1,0061415
answered 4 hours ago
jcaron
1,0061415
answered 4 hours ago
jcaron
1,0061415
answered 4 hours ago
jcaron
1,0061415
1,0061415
1
The question is tagged "india".
– Barmar
24 mins ago
add a comment |Â
1
The question is tagged "india".
– Barmar
24 mins ago
1
1
The question is tagged "india".
– Barmar
24 mins ago
The question is tagged "india".
– Barmar
24 mins ago
add a comment |Â
user5011 is a new contributor. Be nice, and check out our Code of Conduct.
user5011 is a new contributor. Be nice, and check out our Code of Conduct.
user5011 is a new contributor. Be nice, and check out our Code of Conduct.
user5011 is a new contributor. Be nice, and check out our Code of Conduct.
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1
What was the inflation rate in India from 2010 until now? The consumer price index rose from about 90 in 2010 to 140 now Your 44,000 INR then is actually worth about the same as 68,000 INR now, in the sense that it will buy the same amount of "stuff". If that is the case, you have really made hardly any "profit" at all - only the difference between 72,000 and 68,000.
– alephzero
4 hours ago
2
@user5011 - this QA may cause come confusion because (1) in most countries, this is utterly legal and normal, and very many people do it all the time as a matter of course (2) however if you're writing from India - it's actually illegal in India!!
– Fattie
3 hours ago