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With reference to the Forex reserve, consider the following statements:
1. SEBI is the custodian of the Foreign exchange reserves in India.
2. Reserve tranche position is the difference between the IMF’s holdings of that country's currency and the country's IMF-designated quota.
Which of the statements given above is/are correct?
- a)1 only
- b)2 only
- c)Both 1 and 2
- d)Neither 1 nor 2
Correct answer is option 'B'. Can you explain this answer?
Most Upvoted Answer
With reference to the Forex reserve, consider the following statements...
Countries like India and Switzerland accumulated foreign exchange (forex) reserves rather than investing in assets abroad to prevent currency appreciation.
Foreign Exchange reserves or Forex reserves are assets such as foreign currencies, gold reserves, treasury bills, Other Government Securities etc retained by a central bank or other monetary authority.
- RBI is the custodian of the Foreign exchange reserves in India.
- Reserve Bank of India Act, 1934 and the Foreign Exchange Management Act, 1999 set the legal provisions for governing the forex reserves in India.
- It checks the balance payments and influences the foreign exchange rate of its currency and maintains stability in financial markets.
Composition of India’s Forex Reserves
- The Foreign exchange reserves of India consists of below four categories:
- Foreign Currency Assets
- Gold
- SDR
- The SDR is an international reserve asset created by IMF in 1969 for internal accounting purposes.
- SDRs are allocated by the IMF to its member countries and are backed by the full faith and credit of the member countries' governments.
- Also known as paper gold, the value of SDR is based on a basket of five currencies - the U.S. dollar, the euro, the Chinese renminbi, the Japanese yen, and the British pound sterling.
- Reserve with the IMF (also known as reserve tranche position)
- Reserve tranche position is the difference between the IMF’s holdings of that country's currency and the country's IMF-designated quota.
- The reserve tranches that countries hold with the IMF are considered their facilities of first resort, meaning they will tap into them before seeking formal credit that charges interest
Hence only statement 2 is correct.
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With reference to the Forex reserve, consider the following statements:1. SEBI is the custodian of the Foreign exchange reserves in India.2. Reserve tranche position is the difference between the IMF’s holdings of that countrys currency and the countrys IMF-designated quota.Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'B'. Can you explain this answer?
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With reference to the Forex reserve, consider the following statements:1. SEBI is the custodian of the Foreign exchange reserves in India.2. Reserve tranche position is the difference between the IMF’s holdings of that countrys currency and the countrys IMF-designated quota.Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'B'. Can you explain this answer? for UPSC 2025 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about With reference to the Forex reserve, consider the following statements:1. SEBI is the custodian of the Foreign exchange reserves in India.2. Reserve tranche position is the difference between the IMF’s holdings of that countrys currency and the countrys IMF-designated quota.Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for UPSC 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for With reference to the Forex reserve, consider the following statements:1. SEBI is the custodian of the Foreign exchange reserves in India.2. Reserve tranche position is the difference between the IMF’s holdings of that countrys currency and the countrys IMF-designated quota.Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'B'. Can you explain this answer?.
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