The year 2024 was more turbulent for the forex market, where major currency pairs experienced increased volatility and multiple exchange rate acceleration. Factors such as the policy decisions of central banks and the occurrence of world events – wars, geopolitical tensions and market movements. The US dollar and other currencies experienced some periods of strength, but on the other hand, there was some weakness as a result of negative economic and political global factors.
As we look towards 2025, the forex market will remain volatile due to various other aspects of forex. Policy decisions by central banks, expansion of countries' economies and often wars will affect indices of various currencies. It is the responsibility of IT organizations and investors to monitor such evolutions and re-strategize their approaches accordingly.
The Liberalized Remittance Scheme (LRS) has seen record growth in travel and education-related payments in 2024, leading to significant milestones for Indian remittance businesses. The foreign exchange sector expanded to an unprecedented number due to unprecedented foreign travel by Indian tourists.
Pavan Kavad, Managing Director, Prithvi Exchange said, “Due to the surge in tourism, tourism-related transactions rose to a record $17 billion, according to official LRS data. Similarly, despite difficulties in several key areas, remittances for education abroad reached $7 billion. These figures indicate a strong demand for foreign exchange services, making 2024 one of the most profitable years in recent memory for money movers. Countries like Sri Lanka and Thailand have implemented visa-free travel laws, further encouraging Indian tourists to visit foreign countries. On the other hand, Azerbaijan, Thailand, Vietnam and Indonesia have become popular holiday destinations due to their unique cultural appeal and affordable prices.
“But the challenges in the education sector are less. Geopolitical tensions between Canada and India, doubling of Guaranteed Investment Certificate (GIC) requirement from CAD 10,000 to 20,000 and higher TCS deductions posed a major challenge to Indian students. Education-related remittances decreased in Canada as many students opted for other countries.
Another major development was the popularity of cash cards among travelers. This change was driven by growing awareness of its affordability and ease of use, which reduced reliance on traditional cash-based transactions.
Forecast for 2025: The foreign exchange sector is expected to grow further in 2025. With more Indians visiting other countries for vacations and cultural experiences, tourism is projected to reach $20 billion. Indian students pursuing higher education abroad are expected to increase in countries such as France, Germany and the United Arab Emirates, providing a break from the difficulties in the Canadian market.
In addition, major sporting events, international music concerts and destination weddings are becoming increasingly important growth drivers for the tourism and financial industries. Wealthy Indians travel abroad to attend events like Formula 1, Wimbledon and concerts by musicians like Taylor Swift and Coldplay.
“Despite ongoing geopolitical difficulties, the growing aspirations of Indian students and tourists indicate that 2025 will offer further prospects for growth in the foreign exchange industry,” Kavad said.