How was 2024 for the Forex industry and how do you expect 2025?

The year 2024 turned out to be even more turbulent for the Forex market as major currency pairs saw increased volatility and multiple shifts accelerated. Factors such as central bank policy decisions and the occurrence of global events – wars, geopolitical tensions and market movements. Although the US dollar and other currencies witnessed strength in some periods, on the other hand, some weaknesses came as a result of negative global economic and political factors.

As we focus on 2025, the foreign exchange market is likely to remain as volatile as it has been due to various other aspects. Political decisions made by central banks, expansion of countries’ economies, and wars will often affect various currency indices. It is the responsibility of IT companies and investors to monitor such developments and reposition their strategies accordingly.

The LRS saw a record increase in travel and education-related payments in 2024, marking important milestones in India’s currency business. The foreign exchange sector expanded like never before as Indian tourists traveled abroad in numbers never seen before.

Pavan Kavad, Managing Director, Prithvi Exchange, said: “Due to the rise in tourism, travel-related transactions have reached a record high of $17 billion, according to official LRS data. Likewise, despite difficulties in many important locations, remittances for education abroad have reached $7 billion. These figures show strong demand for forex services, making 2024 one of the most profitable years in recent times for money changers. Countries such as Sri Lanka and Thailand have implemented zero-day travel laws visa, which encouraged 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 there have been a few challenges in the education sector. The main challenge for Indian students has arisen due to geopolitical tensions between Canada and India, doubling of the Guaranteed Investment Certificate (GIC) requirement amount from C$10,000 to C$20,000, and rising TCS deductions,” Kavad added. Education-related remittances have declined. Hence in Canada, many students chose to travel to other countries.

The growing popularity of currency cards among tourists was another major development. This change has been made possible by the growing awareness of cost-effectiveness and ease of use, which has led to less 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 holidays and cultural experiences, tourism is expected to reach $20 billion. The number of Indian students pursuing higher education abroad is expected to increase in countries such as France, Germany and the UAE, providing a break from the difficulties they face in the Canadian market.

In addition, major sporting events, international music performances and destination weddings are becoming more important growth drivers for the travel and currency industries. Wealthy Indians travel abroad to attend events such as Formula 1, Wimbledon, and concerts by musicians such as Taylor Swift and Coldplay.

“Despite the ongoing geopolitical difficulties, the growing ambitions of Indian students and tourists indicate that 2025 will provide further growth prospects for the foreign exchange industry,” Kavad said.