SYNOPSI

S
 Management of Foreign Exchange Transactions in India

STATEMENT OF THE PROBLEM

Trade and financial transactions within a country are generally carried out in local currencies i.e.

Rupees in India, unless otherwise permitted in a foreign currency for a specific reason. When

such transactions take place between persons/entities of two different countries that use different

currencies, it is necessary to convert local currencies into foreign currencies or vice versa. These

are known as foreign exchange transactions. In order to facilitate such transactions, commercial

banks appointed as Authorised Dealers in foreign exchange are permitted to buy, sell, lend and

borrow foreign currencies in foreign exchange markets. These foreign exchange dealings are also

treated as foreign exchange transactions. The rate at which the currencies are converted is the

exchange rate. The buying and selling exchange rates are announced daily by the Central Bank.

My Project mainly related to identify:-

1. The management of foreign exchange transaction in India across three different companies

such as bank, manufacturing and Export-Import House.

2. Suggest the ways to minimize the risk from foreign exchange transaction
 WHY IS THE PARTICULAR TOPIC CHOOSEN

Effective foreign exchange management is a financial tool for ensuring the profitability of the

company’s primary business. As such, the company should prepare a comprehensive policy

statement on foreign exchange risk that clearly states the company’s objectives, the tactics for

attaining these objectives, and the allocation of responsibility for exercising these tactics. The

company should rank the types of exposures that it faces as a result of fluctuating exchange rates

according to their importance to financial, operating and senior management. This prioritization

serves as the basis for focusing exposure management efforts and deciding which protective

actions the company should employ. The company should review these ranking as operating

conditions change. For most companies, the management of transactional and consolidated

corporate earnings exposures takes precedence over exposures arising from accounting

translation methods. When situations occur in which the company’s earnings are threatened by

factors arising from more than one type of exposure, treasury staff should treat the underlying

exposure according to the priority assigned by management.

WHAT CONTRIBUTION WOULD THE PROJECT MAKE AND TO WHOM

Result of my survey and analysis would provide very useful input to the management of foreign

exchange transactions as a major concern for companies who deals in day to day to foreign

exchange. My study work will also be appreciated by selected companies to whom I will

research. They have welcomed my effort and hard work and looking forward to collect all

available data in this respect and ensure me that the management will positively think to the

conclusions of my project work.

 OBJECTIVE AND SCOPE OF THE STUDY

OBJECTIVE

To understand the management of foreign exchange transaction in three different

companies such as bank, manufacturing and Export-Import house in India

SCOPE

The scope of my project will be as follow’s:-

i. The study will be confined to a bank, Manufacturing and Export-Import House

ii. The study will be conducted around Delhi/NCR area

iii. The study will be confined to foreign exchange risk, policy and regulation related to

foreign exchange transactions

 Methodology

Sampling

(A) Primary Data:-

The tool of my research for obtaining primary data will be

Questionnaire

i. The sample size is 30

ii. The sample composition will be 10 finance managers each in bank,

manufacturing and Export-Import House

(B) Secondary Data:- The secondary data will be collected from

i. Journals of Trade, International Business

ii. Books related to foreign exchange management

iii. Web articles related to foreign exchange management

Guide’s Resume

About the Guide

1. Name of the Project Guide :

2. Designation & Address :

of Project Guide

3. Title of the project :

4. Date of Submission :

SIGNATURE