BANKING AFFAIRS

Detailed explanation-1: -Exchange control-The forex market is regulated by the RBI with impregnable exchange control regulations. The RBI does not permit a bank to purchase dollars from the RBI and speculate in the interbank market. Selling these dollars in the overseas cross currency market is prohibited by the central bank.

Detailed explanation-2: -RBI has an important role to play in regulating & managing Foreign Exchange of the country. It manages forex and gold reserves of the nation. On a given day, the foreign exchange rate reflects the demand for and supply of foreign exchange arising from trade and capital transactions.