India Foreign Exchange Market to Reach USD 68.8 Billion by 2034 - Expanding at a CAGR of 8.40%

According to the latest report by IMARC Group, titled "India Foreign Exchange Market Report by Counterparty (Reporting Dealers, Other Financial Institutions, Non-Financial Customers), Type (Currency Swap, Outright Forward and Fx Swaps, Fx Options), and Region 2026-2034," the report presents a thorough review featuring the India Foreign Exchange Market growth, share, trends, and research of the industry.

Market Size & Future Growth Potential:

The India foreign exchange market size was valued at USD 33.4 Billion in 2025 and expects the market to reach USD 68.8 Billion by 2034, exhibiting a growth rate (CAGR) of 8.40% during 2026-2034.

India Foreign Exchange Market Trends:

The market is experiencing robust expansion driven by several transformative factors. India's foreign exchange reserves reached remarkable heights, crossing the USD 700 billion mark in October 2025, demonstrating the country's strong economic fundamentals and capacity to withstand external shocks. The average daily turnover in India's forex market nearly doubled from USD 32 billion in 2020 to USD 60 billion in 2024, as highlighted by RBI Governor Sanjay Malhotra at the 24th FIMMDA-PDAI Annual Conference, reflecting the market's dynamic evolution and growing liquidity.

The surge in Non-Resident Indian remittances continues to fuel market growth, with NRI deposits reaching USD 153 billion by August 2024, marking a significant increase from USD 3.7 billion to USD 7.8 billion between April and August 2024. As the world's largest recipient of remittances, India benefits tremendously from these inflows, which strengthen forex reserves and provide crucial stability to currency markets.

Foreign Portfolio Investment inflows have emerged as a key market driver, with FPI reaching USD 44.1 billion in FY24 according to the Economic Survey 2023-24. These substantial inflows help stabilize capital flows and finance India's current account deficit, which narrowed to USD 23.2 billion. The growing confidence of international investors in India's economic trajectory continues to bolster demand for the Indian Rupee and enhance market stability.

India's services exports sector, particularly IT and business services, plays an increasingly vital role in the forex market. Services exports surged from USD 204.76 billion in 2018-2019 to USD 341.25 billion in 2023-2024, representing 43.93% of total exports. Software and IT services remain major contributors to foreign exchange inflows, helping reduce the trade deficit while strengthening the country's position in global value chains.

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India Foreign Exchange Market Scope and Growth Factors:

The scope of India's foreign exchange market is expanding significantly as the nation establishes itself as a global economic powerhouse. Strategic monetary policy decisions by the Reserve Bank of India play a pivotal role in shaping market dynamics. Interest rate adjustments and RBI interventions effectively manage rupee volatility, while foreign direct investment flows significantly impact currency markets. India achieved a historic milestone by reaching USD 1 trillion in cumulative FDI inflows since April 2000, with USD 42.1 billion received in the first half of FY24 alone, marking a 26% increase. From April 2014 to September 2024, India attracted USD 709.84 billion in FDI, accounting for 68.69% of total FDI over the past 24 years.

The market landscape is being transformed by technological advancements and digitalization. Financial institutions increasingly adopt algorithmic trading, artificial intelligence, and blockchain technologies to enhance transaction efficiency and transparency. The integration of advanced fintech solutions enables faster decision-making and more accurate market forecasting, while digital platforms and mobile applications are democratizing access to forex services for small and medium enterprises.

Global economic factors including trade flows, geopolitical developments, and commodity prices significantly influence the market outlook. India's Foreign Exchange Reserves increased by USD 68 billion in FY24, representing the largest rise among major reserve-holding nations. The Indian Rupee maintained relative stability, trading between INR 82 and INR 83.5 against the US dollar for most of the period, supported by higher foreign portfolio investment inflows. However, the rupee faced pressure in early 2025, briefly touching record lows near INR 87.95 per USD, prompting the RBI to conduct record forex sales of USD 398.71 billion on a gross basis in FY25 to defend the currency.

Growing awareness about currency hedging instruments among businesses and rising adoption of multimodal financial solutions continue to expand market participation. The liberalization of forex regulations by the RBI and government initiatives promoting financial inclusion are encouraging broader participation from diverse market segments. The increasing integration of India's financial markets with the global economy, combined with the country's improving position in international competitiveness rankings, further supports sustained market expansion and innovation.

Recent News and Developments:

• RBI's Market Intervention Strategy (April 2025): RBI Governor Sanjay Malhotra announced that India's forex market average daily turnover doubled from USD 32 billion in 2020 to USD 60 billion in 2024, with overnight money market volumes surging by 80% from approximately Rs 3 lakh crore to over Rs 5.4 lakh crore, demonstrating the market's enhanced liquidity and resilience.

• Record Forex Reserve Achievement (October 2025): India's foreign exchange reserves crossed the USD 700 billion mark again, reaching USD 702 billion in the week ending October 17, 2025, driven by sharp increases in gold reserves, with total reserves showing recovery after temporary declines from the all-time high of USD 704.89 billion achieved in September 2024.

• Strategic RBI Liquidity Management (March 2025): The Reserve Bank announced conducting OMO purchases of government securities worth Rs 1 lakh crore in two tranches of Rs 50,000 crore each, alongside USD/INR Buy/Sell Swap auctions to manage forex market volatility and infuse durable liquidity into the banking system following a 25 basis point repo rate cut.

• Thomas Cook-NPCI RuPay Card Innovation (July 2024): Thomas Cook India partnered with NPCI to launch the RuPay AED Forex Card, offering travel vouchers worth Rs 13,900, complimentary insurance coverage up to Rs 7.5 lakh, free ATM withdrawals in UAE, and exclusive discounts on photography experiences at major attractions, reflecting industry focus on innovation and enhanced customer convenience.

• India Crosses USD 1 Trillion FDI Milestone (December 2024): India achieved a landmark milestone with cumulative gross foreign direct investment inflows exceeding USD 1 trillion since April 2000, with Mauritius accounting for 25% of inflows, Singapore 24%, and the United States 10%, demonstrating India's growing appeal as a global investment destination.

• FDI Policy Liberalization (2024): The government amended the Income Tax Act in 2024 to abolish angel tax for startups and foreign investors while reducing income tax rates for foreign companies, complementing liberalized FDI policies that permit 100% FDI under automatic route in most sectors except strategically important areas.

• Enhanced FCNR Deposit Rates (December 2024): The RBI allowed banks to raise interest rates on Foreign Currency Non-Resident deposits by 150 basis points to attract dollar deposits from NRIs, supporting efforts to strengthen forex reserves amid rupee depreciation pressures.

Comprehensive Market Report Highlights & Segmentation Analysis:

The market report offers a comprehensive analysis of the segments, highlighting those with the largest India Foreign Exchange Market Share. It includes forecasts for the period 2026-2034 and historical data from 2020-2025 for the following segments.

Segmentation by Counterparty:

• Reporting Dealers
• Other Financial Institutions
• Non-Financial Customers

Segmentation by Type:

• Currency Swap
• Outright Forward and Fx Swaps
• Fx Options

Segmentation by Region:

• South India
• North India
• West and Central India
• East India

Competitor Landscape:

The report offers an in-depth examination of the competitive landscape. It includes a thorough competitive analysis encompassing market structure, key player positioning, leading strategies for success, a competitive dashboard, and a company evaluation quadrant.

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Key highlights of the Report:

• Historical Market Performance
• Future Market Projections
• Impact of COVID-19 on Market Dynamics
• Industry Competitive Analysis (Porter's Five Forces)
• Market Dynamics and Growth Drivers
• SWOT Analysis (Strengths, Weaknesses, Opportunities, Threats)
• Market Ecosystem and Value Creation Framework
• Competitive Positioning and Benchmarking Strategies

Major Advantages of the Report:

• This report provides market leaders and new entrants with accurate revenue estimates for the overall market and its key subsegments.
• Stakeholders can leverage this report to gain a deeper understanding of the competitive landscape, enabling them to strategically position their businesses and develop effective go-to-market strategies.
• The report provides stakeholders with valuable insights into the market dynamics, offering a comprehensive analysis of key drivers, restraints, challenges, and opportunities.

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