India plans to migrate rupee trading back home. Why is that an uphill task?

London has become the biggest center for trading the Indian currency, according to the latest survey by the Bank for International Settlements in September.

As London does more rupee trading than Mumbai, authorities in India are taking steps to get foreigners to transact onshore. Analysts say that will be no easy task. There’s no good reason for market participants to switch from excellent global trading hubs such as Singapore and London, said Jeffrey Halley, a senior market analyst at Oanda Asia Pacific Pte., who’s extensively traded currencies in offshore markets over a three-decade career. For Schroder Investment Management Ltd., the need to add more counterparties would just increase investors’ trading costs.

India’s authorities are concerned a surge in rupee trading overseas threatens the stability of