Section 8(2) of FERA 1973 lays down that all transactions in foreign exchange shall be done at rates for the time being authorised by Reserve Bank. In pursuance of this provision, Reserve Bank has authorised that the rates of exchange for inter-bank as well as merchant transactions in all currencies (including currency notes and travellers cheques) may be fixed by authorised dealers on the basis of prevailing market conditions subject to the guidelines that may be framed by the Foreign Exchange Dealers Association of India (FEDAI) from time to time. The terms and conditions laid down by FEDAI for transacting foreign exchange business will govern all business transacted by authorised dealers.