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Which of the following steps can be taken by the RBI to curb the fall of the Indian currency?
1. Increasing the limit for outbound investment and remittances from India.
2. Increasing customs duty on gold imports.
3. Imposing administrative restrictions on banks' investment schemes to non-resident Indians.
Select the correct answer using the code given below.
1. Increasing the limit for outbound investment and remittances from India.
2. Increasing customs duty on gold imports.
3. Imposing administrative restrictions on banks' investment schemes to non-resident Indians.
Select the correct answer using the code given below.
- a)1 and 2 only
- b)2 only
- c)2 and 3 only
- d)None
Correct answer is option 'D'. Can you explain this answer?
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Most Upvoted Answer
Which of the following steps can be taken by the RBI to curb the fall ...
- Currency depreciation is a fall in the value of a currency in a floating exchange rate system. Currency depreciation can occur due to factors such as economic fundamentals, interest rate differentials, political instability or risk aversion among investors.
- The rupee depreciation may feed into inflation by affecting the price of imported goods, especially oil. Depreciation currently brings many costs in lieu of a few benefits.
- Causes of Rupee depreciation:
(i) Uncertainty with regard to global output and trade growth was the basic factor responsible for the deceleration and reversal in the volume of net portfolio investment inflows. Thus weakening rupee,
(ii) Evidence that the Indian economy has turned sluggish has not helped an already weakened investor sentiment.
(iii) The increase in External Commercial Borrowings (ECBs) that resulted from the policy changes has also increased the exposure of Indian business to foreign currency risk. - Following steps taken can be taken by the RBI and the government of India to stabilize the currency markets:
(i) Allowing higher limits of outflows creates more demand for foreign currency and thus depreciating rupee much further. RBI can reduce the limit under the Liberalised Remittance Scheme (LRS). These strong steps can safeguard the currency from depreciating much further. Hence, statement 1 is not correct.
(ii) Increasing customs duty would increase prices of gold in the domestic market and thus lowers the demand for gold. Lower demand for gold would lower the gold imports. Thus less foreign currency is required for trade and currency stabilizes. The Finance Ministry (Government) can increase the customs duty on importing precious metals including gold and platinum. Hence, statement 2 is not correct.
(iii) Japan and India entered into a $75-billion currency swap arrangement that will bolster the country’s firepower as it battles a steep drop in the rupee’s value. This New Swap Agreement should aid in bringing greater stability to foreign exchange & capital markets in India.
(iv) Removed administrative restrictions on investment schemes offered by banks to non-resident Indians would increase foreign investment inflows. RBI has removed administrative restrictions and the ceiling on interest rates on deposit accounts held by NRIs. The government liberalized the FDI limits for 12 sectors, including oil and gas. This would increase foreign investment inflows and thus stabilize Indian rupee. Hence, statement 3 is not correct.
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Which of the following steps can be taken by the RBI to curb the fall of the Indian currency?1. Increasing the limit for outbound investment and remittances from India.2. Increasing customs duty on gold imports.3. Imposing administrative restrictions on banks investment schemes to non-resident Indians.Select the correct answer using the code given below.a)1 and 2 onlyb)2 onlyc)2 and 3 onlyd)NoneCorrect answer is option 'D'. Can you explain this answer?
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Which of the following steps can be taken by the RBI to curb the fall of the Indian currency?1. Increasing the limit for outbound investment and remittances from India.2. Increasing customs duty on gold imports.3. Imposing administrative restrictions on banks investment schemes to non-resident Indians.Select the correct answer using the code given below.a)1 and 2 onlyb)2 onlyc)2 and 3 onlyd)NoneCorrect answer is option 'D'. Can you explain this answer? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Which of the following steps can be taken by the RBI to curb the fall of the Indian currency?1. Increasing the limit for outbound investment and remittances from India.2. Increasing customs duty on gold imports.3. Imposing administrative restrictions on banks investment schemes to non-resident Indians.Select the correct answer using the code given below.a)1 and 2 onlyb)2 onlyc)2 and 3 onlyd)NoneCorrect answer is option 'D'. Can you explain this answer? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Which of the following steps can be taken by the RBI to curb the fall of the Indian currency?1. Increasing the limit for outbound investment and remittances from India.2. Increasing customs duty on gold imports.3. Imposing administrative restrictions on banks investment schemes to non-resident Indians.Select the correct answer using the code given below.a)1 and 2 onlyb)2 onlyc)2 and 3 onlyd)NoneCorrect answer is option 'D'. Can you explain this answer?.
Which of the following steps can be taken by the RBI to curb the fall of the Indian currency?1. Increasing the limit for outbound investment and remittances from India.2. Increasing customs duty on gold imports.3. Imposing administrative restrictions on banks investment schemes to non-resident Indians.Select the correct answer using the code given below.a)1 and 2 onlyb)2 onlyc)2 and 3 onlyd)NoneCorrect answer is option 'D'. Can you explain this answer? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Which of the following steps can be taken by the RBI to curb the fall of the Indian currency?1. Increasing the limit for outbound investment and remittances from India.2. Increasing customs duty on gold imports.3. Imposing administrative restrictions on banks investment schemes to non-resident Indians.Select the correct answer using the code given below.a)1 and 2 onlyb)2 onlyc)2 and 3 onlyd)NoneCorrect answer is option 'D'. Can you explain this answer? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Which of the following steps can be taken by the RBI to curb the fall of the Indian currency?1. Increasing the limit for outbound investment and remittances from India.2. Increasing customs duty on gold imports.3. Imposing administrative restrictions on banks investment schemes to non-resident Indians.Select the correct answer using the code given below.a)1 and 2 onlyb)2 onlyc)2 and 3 onlyd)NoneCorrect answer is option 'D'. Can you explain this answer?.
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