Full Convertibility of the Indian Rupee: Exchange Rates and Feasibility

Abstract

Convertible currencies are defined as currencies that are readily bought, sold, and converted without the need for permission from a central bank or Government entity. Most major currencies are fully convertible; i.e. they can be traded freely without restriction and with no permission required. The easy convertibility of currency is a relatively recent development and is in part attributable to the growth of the international trading markets and the FOREX markets in particular. Historically, movement away from the gold exchange standard once in common usage has led to more and more convertible currencies becoming available on the market. Because the value of currencies is established in comparison to each other, rather than measured against a real commodity like gold or silver, the ready trade of currencies can offer investors an opportunity for profit.