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Directions: Read the following case study and answer the questions 51 to 55.
In the Indian context, the RBI Act and the Foreign Exchange Management Act, 1999 set the legal provisions for governing the foreign exchange reserves. RBI acts as the chief monetary authority and the custodian of foreign exchange assets. RBI accumulates foreign currency reserves by purchasing from authorised dealers in the open market operations. The type of instruments in which RBI can invest is stipulated in the RBI Act. The aid received by the government also becomes a part of the reserves.
The Asian crisis tells us how countries suffer due to ill management of the foreign exchange reserves. Many countries foresaw
the vulnerability to the external shocks and accumulated heavy foreign exchange reserves. Countries want to keep their exports competitive. Hence, they prefer to depreciate their currencies against dollars. In recent days, there has been a continuous appreciation of rupee vis-a-vis dollar. To avoid the appreciation of rupee, RBI has been continuously interfering in the money market. RBI is buying dollars from the market. The dollars that are being bought add to the foreign exchange kitty.
Unlike, in the past, the NRI community is more dispersed now, not just confining to the Gulf. Due to software boom, Indians are heading towards new destinations. NRIs are doing well there and ploughing back their savings to India. Moreover, foreign institutional investors are also making huge investments into Indian stocks.
The emergence of India as an offshore outsourcing hub has created new opportunities. There are huge dollar earnings for India. Further, India is also proving to be a worthy manufacturing hub for many companies. All these factors played a positive role in building up of huge foreign exchange reserves.
In the Indian context, the RBI Act and the Foreign Exchange Management Act, 1999 set the legal provisions for governing the foreign exchange reserves. RBI acts as the chief monetary authority and the custodian of foreign exchange assets. RBI accumulates foreign currency reserves by purchasing from authorised dealers in the open market operations. The type of instruments in which RBI can invest is stipulated in the RBI Act. The aid received by the government also becomes a part of the reserves.
The Asian crisis tells us how countries suffer due to ill management of the foreign exchange reserves. Many countries foresaw
the vulnerability to the external shocks and accumulated heavy foreign exchange reserves. Countries want to keep their exports competitive. Hence, they prefer to depreciate their currencies against dollars. In recent days, there has been a continuous appreciation of rupee vis-a-vis dollar. To avoid the appreciation of rupee, RBI has been continuously interfering in the money market. RBI is buying dollars from the market. The dollars that are being bought add to the foreign exchange kitty.
Unlike, in the past, the NRI community is more dispersed now, not just confining to the Gulf. Due to software boom, Indians are heading towards new destinations. NRIs are doing well there and ploughing back their savings to India. Moreover, foreign institutional investors are also making huge investments into Indian stocks.
The emergence of India as an offshore outsourcing hub has created new opportunities. There are huge dollar earnings for India. Further, India is also proving to be a worthy manufacturing hub for many companies. All these factors played a positive role in building up of huge foreign exchange reserves.
Q. During the economic crisis of 1990s, India opted for which of the following foreign exchange measure?
- a)Devaluation of Currency
- b)Moving towards market-based determination of exchange rate
- c)Both (a) and (b)
- d)None of the above
Correct answer is option 'C'. Can you explain this answer?
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Directions: Read the following case study and answer the questions 51 ...
As a part of new economic reform, India opted for above mentioned policies in the foreign exchange market to improve its condition.
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Directions: Read the following case study and answer the questions 51 ...
Explanation:
Background:
India faced an economic crisis in the 1990s due to various factors such as high inflation, low growth, and a balance of payments crisis.
Foreign Exchange Measures:
- Devaluation of Currency: To address the crisis, India initially opted for devaluation of its currency to make exports more competitive and reduce the trade deficit.
- Moving towards Market-based Determination of Exchange Rate: As part of the economic reforms, India gradually shifted towards a market-based determination of the exchange rate to bring more stability and transparency in the foreign exchange market.
Combination of Measures:
- Both (a) and (b): India's approach during the economic crisis of the 1990s involved a combination of devaluation of currency and moving towards a market-based determination of the exchange rate. These measures were aimed at addressing the external vulnerabilities and improving the competitiveness of Indian exports.
Impact:
- The combination of devaluation and market-based exchange rate determination helped India in stabilizing its economy, attracting foreign investments, and building up its foreign exchange reserves.
- These measures played a crucial role in steering India towards economic growth and development in the subsequent years.
Conclusion:
The adoption of both devaluation of currency and a market-based exchange rate determination strategy during the economic crisis of the 1990s played a significant role in shaping India's economic policies and laying the foundation for future growth and stability.
Background:
India faced an economic crisis in the 1990s due to various factors such as high inflation, low growth, and a balance of payments crisis.
Foreign Exchange Measures:
- Devaluation of Currency: To address the crisis, India initially opted for devaluation of its currency to make exports more competitive and reduce the trade deficit.
- Moving towards Market-based Determination of Exchange Rate: As part of the economic reforms, India gradually shifted towards a market-based determination of the exchange rate to bring more stability and transparency in the foreign exchange market.
Combination of Measures:
- Both (a) and (b): India's approach during the economic crisis of the 1990s involved a combination of devaluation of currency and moving towards a market-based determination of the exchange rate. These measures were aimed at addressing the external vulnerabilities and improving the competitiveness of Indian exports.
Impact:
- The combination of devaluation and market-based exchange rate determination helped India in stabilizing its economy, attracting foreign investments, and building up its foreign exchange reserves.
- These measures played a crucial role in steering India towards economic growth and development in the subsequent years.
Conclusion:
The adoption of both devaluation of currency and a market-based exchange rate determination strategy during the economic crisis of the 1990s played a significant role in shaping India's economic policies and laying the foundation for future growth and stability.
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Directions: Read the following case study and answer the questions 51 to 55.In the Indian context, the RBI Act and the Foreign Exchange Management Act, 1999 set the legal provisions for governing the foreign exchange reserves. RBI acts as the chief monetary authority and the custodian of foreign exchange assets. RBI accumulates foreign currency reserves by purchasing from authorised dealers in the open market operations. The type of instruments in which RBI can invest is stipulated in the RBI Act. The aid received by the government also becomes a part of the reserves.The Asian crisis tells us how countries suffer due to ill management of the foreign exchange reserves. Many countries foresawthe vulnerability to the external shocks and accumulated heavy foreign exchange reserves. Countries want to keep their exports competitive. Hence, they prefer to depreciate their currencies against dollars. In recent days, there has been a continuous appreciation of rupee vis-a-vis dollar. To avoid the appreciation of rupee, RBI has been continuously interfering in the money market. RBI is buying dollars from the market. The dollars that are being bought add to the foreign exchange kitty.Unlike, in the past, the NRI community is more dispersed now, not just confining to the Gulf. Due to software boom, Indians are heading towards new destinations. NRIs are doing well there and ploughing back their savings to India. Moreover, foreign institutional investors are also making huge investments into Indian stocks.The emergence of India as an offshore outsourcing hub has created new opportunities. There are huge dollar earnings for India. Further, India is also proving to be a worthy manufacturing hub for many companies. All these factors played a positive role in building up of huge foreign exchange reserves.Q.During the economic crisis of 1990s, India opted for which of the following foreign exchange measure?a)Devaluation of Currencyb)Moving towards market-based determination of exchange ratec)Both (a) and (b)d)None of the aboveCorrect answer is option 'C'. Can you explain this answer?
Question Description
Directions: Read the following case study and answer the questions 51 to 55.In the Indian context, the RBI Act and the Foreign Exchange Management Act, 1999 set the legal provisions for governing the foreign exchange reserves. RBI acts as the chief monetary authority and the custodian of foreign exchange assets. RBI accumulates foreign currency reserves by purchasing from authorised dealers in the open market operations. The type of instruments in which RBI can invest is stipulated in the RBI Act. The aid received by the government also becomes a part of the reserves.The Asian crisis tells us how countries suffer due to ill management of the foreign exchange reserves. Many countries foresawthe vulnerability to the external shocks and accumulated heavy foreign exchange reserves. Countries want to keep their exports competitive. Hence, they prefer to depreciate their currencies against dollars. In recent days, there has been a continuous appreciation of rupee vis-a-vis dollar. To avoid the appreciation of rupee, RBI has been continuously interfering in the money market. RBI is buying dollars from the market. The dollars that are being bought add to the foreign exchange kitty.Unlike, in the past, the NRI community is more dispersed now, not just confining to the Gulf. Due to software boom, Indians are heading towards new destinations. NRIs are doing well there and ploughing back their savings to India. Moreover, foreign institutional investors are also making huge investments into Indian stocks.The emergence of India as an offshore outsourcing hub has created new opportunities. There are huge dollar earnings for India. Further, India is also proving to be a worthy manufacturing hub for many companies. All these factors played a positive role in building up of huge foreign exchange reserves.Q.During the economic crisis of 1990s, India opted for which of the following foreign exchange measure?a)Devaluation of Currencyb)Moving towards market-based determination of exchange ratec)Both (a) and (b)d)None of the aboveCorrect answer is option 'C'. Can you explain this answer? for Class 12 2024 is part of Class 12 preparation. The Question and answers have been prepared according to the Class 12 exam syllabus. Information about Directions: Read the following case study and answer the questions 51 to 55.In the Indian context, the RBI Act and the Foreign Exchange Management Act, 1999 set the legal provisions for governing the foreign exchange reserves. RBI acts as the chief monetary authority and the custodian of foreign exchange assets. RBI accumulates foreign currency reserves by purchasing from authorised dealers in the open market operations. The type of instruments in which RBI can invest is stipulated in the RBI Act. The aid received by the government also becomes a part of the reserves.The Asian crisis tells us how countries suffer due to ill management of the foreign exchange reserves. Many countries foresawthe vulnerability to the external shocks and accumulated heavy foreign exchange reserves. Countries want to keep their exports competitive. Hence, they prefer to depreciate their currencies against dollars. In recent days, there has been a continuous appreciation of rupee vis-a-vis dollar. To avoid the appreciation of rupee, RBI has been continuously interfering in the money market. RBI is buying dollars from the market. The dollars that are being bought add to the foreign exchange kitty.Unlike, in the past, the NRI community is more dispersed now, not just confining to the Gulf. Due to software boom, Indians are heading towards new destinations. NRIs are doing well there and ploughing back their savings to India. Moreover, foreign institutional investors are also making huge investments into Indian stocks.The emergence of India as an offshore outsourcing hub has created new opportunities. There are huge dollar earnings for India. Further, India is also proving to be a worthy manufacturing hub for many companies. All these factors played a positive role in building up of huge foreign exchange reserves.Q.During the economic crisis of 1990s, India opted for which of the following foreign exchange measure?a)Devaluation of Currencyb)Moving towards market-based determination of exchange ratec)Both (a) and (b)d)None of the aboveCorrect answer is option 'C'. Can you explain this answer? covers all topics & solutions for Class 12 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Directions: Read the following case study and answer the questions 51 to 55.In the Indian context, the RBI Act and the Foreign Exchange Management Act, 1999 set the legal provisions for governing the foreign exchange reserves. RBI acts as the chief monetary authority and the custodian of foreign exchange assets. RBI accumulates foreign currency reserves by purchasing from authorised dealers in the open market operations. The type of instruments in which RBI can invest is stipulated in the RBI Act. The aid received by the government also becomes a part of the reserves.The Asian crisis tells us how countries suffer due to ill management of the foreign exchange reserves. Many countries foresawthe vulnerability to the external shocks and accumulated heavy foreign exchange reserves. Countries want to keep their exports competitive. Hence, they prefer to depreciate their currencies against dollars. In recent days, there has been a continuous appreciation of rupee vis-a-vis dollar. To avoid the appreciation of rupee, RBI has been continuously interfering in the money market. RBI is buying dollars from the market. The dollars that are being bought add to the foreign exchange kitty.Unlike, in the past, the NRI community is more dispersed now, not just confining to the Gulf. Due to software boom, Indians are heading towards new destinations. NRIs are doing well there and ploughing back their savings to India. Moreover, foreign institutional investors are also making huge investments into Indian stocks.The emergence of India as an offshore outsourcing hub has created new opportunities. There are huge dollar earnings for India. Further, India is also proving to be a worthy manufacturing hub for many companies. All these factors played a positive role in building up of huge foreign exchange reserves.Q.During the economic crisis of 1990s, India opted for which of the following foreign exchange measure?a)Devaluation of Currencyb)Moving towards market-based determination of exchange ratec)Both (a) and (b)d)None of the aboveCorrect answer is option 'C'. Can you explain this answer?.
Directions: Read the following case study and answer the questions 51 to 55.In the Indian context, the RBI Act and the Foreign Exchange Management Act, 1999 set the legal provisions for governing the foreign exchange reserves. RBI acts as the chief monetary authority and the custodian of foreign exchange assets. RBI accumulates foreign currency reserves by purchasing from authorised dealers in the open market operations. The type of instruments in which RBI can invest is stipulated in the RBI Act. The aid received by the government also becomes a part of the reserves.The Asian crisis tells us how countries suffer due to ill management of the foreign exchange reserves. Many countries foresawthe vulnerability to the external shocks and accumulated heavy foreign exchange reserves. Countries want to keep their exports competitive. Hence, they prefer to depreciate their currencies against dollars. In recent days, there has been a continuous appreciation of rupee vis-a-vis dollar. To avoid the appreciation of rupee, RBI has been continuously interfering in the money market. RBI is buying dollars from the market. The dollars that are being bought add to the foreign exchange kitty.Unlike, in the past, the NRI community is more dispersed now, not just confining to the Gulf. Due to software boom, Indians are heading towards new destinations. NRIs are doing well there and ploughing back their savings to India. Moreover, foreign institutional investors are also making huge investments into Indian stocks.The emergence of India as an offshore outsourcing hub has created new opportunities. There are huge dollar earnings for India. Further, India is also proving to be a worthy manufacturing hub for many companies. All these factors played a positive role in building up of huge foreign exchange reserves.Q.During the economic crisis of 1990s, India opted for which of the following foreign exchange measure?a)Devaluation of Currencyb)Moving towards market-based determination of exchange ratec)Both (a) and (b)d)None of the aboveCorrect answer is option 'C'. Can you explain this answer? for Class 12 2024 is part of Class 12 preparation. The Question and answers have been prepared according to the Class 12 exam syllabus. Information about Directions: Read the following case study and answer the questions 51 to 55.In the Indian context, the RBI Act and the Foreign Exchange Management Act, 1999 set the legal provisions for governing the foreign exchange reserves. RBI acts as the chief monetary authority and the custodian of foreign exchange assets. RBI accumulates foreign currency reserves by purchasing from authorised dealers in the open market operations. The type of instruments in which RBI can invest is stipulated in the RBI Act. The aid received by the government also becomes a part of the reserves.The Asian crisis tells us how countries suffer due to ill management of the foreign exchange reserves. Many countries foresawthe vulnerability to the external shocks and accumulated heavy foreign exchange reserves. Countries want to keep their exports competitive. Hence, they prefer to depreciate their currencies against dollars. In recent days, there has been a continuous appreciation of rupee vis-a-vis dollar. To avoid the appreciation of rupee, RBI has been continuously interfering in the money market. RBI is buying dollars from the market. The dollars that are being bought add to the foreign exchange kitty.Unlike, in the past, the NRI community is more dispersed now, not just confining to the Gulf. Due to software boom, Indians are heading towards new destinations. NRIs are doing well there and ploughing back their savings to India. Moreover, foreign institutional investors are also making huge investments into Indian stocks.The emergence of India as an offshore outsourcing hub has created new opportunities. There are huge dollar earnings for India. Further, India is also proving to be a worthy manufacturing hub for many companies. All these factors played a positive role in building up of huge foreign exchange reserves.Q.During the economic crisis of 1990s, India opted for which of the following foreign exchange measure?a)Devaluation of Currencyb)Moving towards market-based determination of exchange ratec)Both (a) and (b)d)None of the aboveCorrect answer is option 'C'. Can you explain this answer? covers all topics & solutions for Class 12 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Directions: Read the following case study and answer the questions 51 to 55.In the Indian context, the RBI Act and the Foreign Exchange Management Act, 1999 set the legal provisions for governing the foreign exchange reserves. RBI acts as the chief monetary authority and the custodian of foreign exchange assets. RBI accumulates foreign currency reserves by purchasing from authorised dealers in the open market operations. The type of instruments in which RBI can invest is stipulated in the RBI Act. The aid received by the government also becomes a part of the reserves.The Asian crisis tells us how countries suffer due to ill management of the foreign exchange reserves. Many countries foresawthe vulnerability to the external shocks and accumulated heavy foreign exchange reserves. Countries want to keep their exports competitive. Hence, they prefer to depreciate their currencies against dollars. In recent days, there has been a continuous appreciation of rupee vis-a-vis dollar. To avoid the appreciation of rupee, RBI has been continuously interfering in the money market. RBI is buying dollars from the market. The dollars that are being bought add to the foreign exchange kitty.Unlike, in the past, the NRI community is more dispersed now, not just confining to the Gulf. Due to software boom, Indians are heading towards new destinations. NRIs are doing well there and ploughing back their savings to India. Moreover, foreign institutional investors are also making huge investments into Indian stocks.The emergence of India as an offshore outsourcing hub has created new opportunities. There are huge dollar earnings for India. Further, India is also proving to be a worthy manufacturing hub for many companies. All these factors played a positive role in building up of huge foreign exchange reserves.Q.During the economic crisis of 1990s, India opted for which of the following foreign exchange measure?a)Devaluation of Currencyb)Moving towards market-based determination of exchange ratec)Both (a) and (b)d)None of the aboveCorrect answer is option 'C'. Can you explain this answer?.
Solutions for Directions: Read the following case study and answer the questions 51 to 55.In the Indian context, the RBI Act and the Foreign Exchange Management Act, 1999 set the legal provisions for governing the foreign exchange reserves. RBI acts as the chief monetary authority and the custodian of foreign exchange assets. RBI accumulates foreign currency reserves by purchasing from authorised dealers in the open market operations. The type of instruments in which RBI can invest is stipulated in the RBI Act. The aid received by the government also becomes a part of the reserves.The Asian crisis tells us how countries suffer due to ill management of the foreign exchange reserves. Many countries foresawthe vulnerability to the external shocks and accumulated heavy foreign exchange reserves. Countries want to keep their exports competitive. Hence, they prefer to depreciate their currencies against dollars. In recent days, there has been a continuous appreciation of rupee vis-a-vis dollar. To avoid the appreciation of rupee, RBI has been continuously interfering in the money market. RBI is buying dollars from the market. The dollars that are being bought add to the foreign exchange kitty.Unlike, in the past, the NRI community is more dispersed now, not just confining to the Gulf. Due to software boom, Indians are heading towards new destinations. NRIs are doing well there and ploughing back their savings to India. Moreover, foreign institutional investors are also making huge investments into Indian stocks.The emergence of India as an offshore outsourcing hub has created new opportunities. There are huge dollar earnings for India. Further, India is also proving to be a worthy manufacturing hub for many companies. All these factors played a positive role in building up of huge foreign exchange reserves.Q.During the economic crisis of 1990s, India opted for which of the following foreign exchange measure?a)Devaluation of Currencyb)Moving towards market-based determination of exchange ratec)Both (a) and (b)d)None of the aboveCorrect answer is option 'C'. Can you explain this answer? in English & in Hindi are available as part of our courses for Class 12.
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Here you can find the meaning of Directions: Read the following case study and answer the questions 51 to 55.In the Indian context, the RBI Act and the Foreign Exchange Management Act, 1999 set the legal provisions for governing the foreign exchange reserves. RBI acts as the chief monetary authority and the custodian of foreign exchange assets. RBI accumulates foreign currency reserves by purchasing from authorised dealers in the open market operations. The type of instruments in which RBI can invest is stipulated in the RBI Act. The aid received by the government also becomes a part of the reserves.The Asian crisis tells us how countries suffer due to ill management of the foreign exchange reserves. Many countries foresawthe vulnerability to the external shocks and accumulated heavy foreign exchange reserves. Countries want to keep their exports competitive. Hence, they prefer to depreciate their currencies against dollars. In recent days, there has been a continuous appreciation of rupee vis-a-vis dollar. To avoid the appreciation of rupee, RBI has been continuously interfering in the money market. RBI is buying dollars from the market. The dollars that are being bought add to the foreign exchange kitty.Unlike, in the past, the NRI community is more dispersed now, not just confining to the Gulf. Due to software boom, Indians are heading towards new destinations. NRIs are doing well there and ploughing back their savings to India. Moreover, foreign institutional investors are also making huge investments into Indian stocks.The emergence of India as an offshore outsourcing hub has created new opportunities. There are huge dollar earnings for India. Further, India is also proving to be a worthy manufacturing hub for many companies. All these factors played a positive role in building up of huge foreign exchange reserves.Q.During the economic crisis of 1990s, India opted for which of the following foreign exchange measure?a)Devaluation of Currencyb)Moving towards market-based determination of exchange ratec)Both (a) and (b)d)None of the aboveCorrect answer is option 'C'. Can you explain this answer? defined & explained in the simplest way possible. Besides giving the explanation of
Directions: Read the following case study and answer the questions 51 to 55.In the Indian context, the RBI Act and the Foreign Exchange Management Act, 1999 set the legal provisions for governing the foreign exchange reserves. RBI acts as the chief monetary authority and the custodian of foreign exchange assets. RBI accumulates foreign currency reserves by purchasing from authorised dealers in the open market operations. The type of instruments in which RBI can invest is stipulated in the RBI Act. The aid received by the government also becomes a part of the reserves.The Asian crisis tells us how countries suffer due to ill management of the foreign exchange reserves. Many countries foresawthe vulnerability to the external shocks and accumulated heavy foreign exchange reserves. Countries want to keep their exports competitive. Hence, they prefer to depreciate their currencies against dollars. In recent days, there has been a continuous appreciation of rupee vis-a-vis dollar. To avoid the appreciation of rupee, RBI has been continuously interfering in the money market. RBI is buying dollars from the market. The dollars that are being bought add to the foreign exchange kitty.Unlike, in the past, the NRI community is more dispersed now, not just confining to the Gulf. Due to software boom, Indians are heading towards new destinations. NRIs are doing well there and ploughing back their savings to India. Moreover, foreign institutional investors are also making huge investments into Indian stocks.The emergence of India as an offshore outsourcing hub has created new opportunities. There are huge dollar earnings for India. Further, India is also proving to be a worthy manufacturing hub for many companies. All these factors played a positive role in building up of huge foreign exchange reserves.Q.During the economic crisis of 1990s, India opted for which of the following foreign exchange measure?a)Devaluation of Currencyb)Moving towards market-based determination of exchange ratec)Both (a) and (b)d)None of the aboveCorrect answer is option 'C'. Can you explain this answer?, a detailed solution for Directions: Read the following case study and answer the questions 51 to 55.In the Indian context, the RBI Act and the Foreign Exchange Management Act, 1999 set the legal provisions for governing the foreign exchange reserves. RBI acts as the chief monetary authority and the custodian of foreign exchange assets. RBI accumulates foreign currency reserves by purchasing from authorised dealers in the open market operations. The type of instruments in which RBI can invest is stipulated in the RBI Act. The aid received by the government also becomes a part of the reserves.The Asian crisis tells us how countries suffer due to ill management of the foreign exchange reserves. Many countries foresawthe vulnerability to the external shocks and accumulated heavy foreign exchange reserves. Countries want to keep their exports competitive. Hence, they prefer to depreciate their currencies against dollars. In recent days, there has been a continuous appreciation of rupee vis-a-vis dollar. To avoid the appreciation of rupee, RBI has been continuously interfering in the money market. RBI is buying dollars from the market. The dollars that are being bought add to the foreign exchange kitty.Unlike, in the past, the NRI community is more dispersed now, not just confining to the Gulf. Due to software boom, Indians are heading towards new destinations. NRIs are doing well there and ploughing back their savings to India. Moreover, foreign institutional investors are also making huge investments into Indian stocks.The emergence of India as an offshore outsourcing hub has created new opportunities. There are huge dollar earnings for India. Further, India is also proving to be a worthy manufacturing hub for many companies. All these factors played a positive role in building up of huge foreign exchange reserves.Q.During the economic crisis of 1990s, India opted for which of the following foreign exchange measure?a)Devaluation of Currencyb)Moving towards market-based determination of exchange ratec)Both (a) and (b)d)None of the aboveCorrect answer is option 'C'. Can you explain this answer? has been provided alongside types of Directions: Read the following case study and answer the questions 51 to 55.In the Indian context, the RBI Act and the Foreign Exchange Management Act, 1999 set the legal provisions for governing the foreign exchange reserves. RBI acts as the chief monetary authority and the custodian of foreign exchange assets. RBI accumulates foreign currency reserves by purchasing from authorised dealers in the open market operations. The type of instruments in which RBI can invest is stipulated in the RBI Act. The aid received by the government also becomes a part of the reserves.The Asian crisis tells us how countries suffer due to ill management of the foreign exchange reserves. Many countries foresawthe vulnerability to the external shocks and accumulated heavy foreign exchange reserves. Countries want to keep their exports competitive. Hence, they prefer to depreciate their currencies against dollars. In recent days, there has been a continuous appreciation of rupee vis-a-vis dollar. To avoid the appreciation of rupee, RBI has been continuously interfering in the money market. RBI is buying dollars from the market. The dollars that are being bought add to the foreign exchange kitty.Unlike, in the past, the NRI community is more dispersed now, not just confining to the Gulf. Due to software boom, Indians are heading towards new destinations. NRIs are doing well there and ploughing back their savings to India. Moreover, foreign institutional investors are also making huge investments into Indian stocks.The emergence of India as an offshore outsourcing hub has created new opportunities. There are huge dollar earnings for India. Further, India is also proving to be a worthy manufacturing hub for many companies. All these factors played a positive role in building up of huge foreign exchange reserves.Q.During the economic crisis of 1990s, India opted for which of the following foreign exchange measure?a)Devaluation of Currencyb)Moving towards market-based determination of exchange ratec)Both (a) and (b)d)None of the aboveCorrect answer is option 'C'. Can you explain this answer? theory, EduRev gives you an
ample number of questions to practice Directions: Read the following case study and answer the questions 51 to 55.In the Indian context, the RBI Act and the Foreign Exchange Management Act, 1999 set the legal provisions for governing the foreign exchange reserves. RBI acts as the chief monetary authority and the custodian of foreign exchange assets. RBI accumulates foreign currency reserves by purchasing from authorised dealers in the open market operations. The type of instruments in which RBI can invest is stipulated in the RBI Act. The aid received by the government also becomes a part of the reserves.The Asian crisis tells us how countries suffer due to ill management of the foreign exchange reserves. Many countries foresawthe vulnerability to the external shocks and accumulated heavy foreign exchange reserves. Countries want to keep their exports competitive. Hence, they prefer to depreciate their currencies against dollars. In recent days, there has been a continuous appreciation of rupee vis-a-vis dollar. To avoid the appreciation of rupee, RBI has been continuously interfering in the money market. RBI is buying dollars from the market. The dollars that are being bought add to the foreign exchange kitty.Unlike, in the past, the NRI community is more dispersed now, not just confining to the Gulf. Due to software boom, Indians are heading towards new destinations. NRIs are doing well there and ploughing back their savings to India. Moreover, foreign institutional investors are also making huge investments into Indian stocks.The emergence of India as an offshore outsourcing hub has created new opportunities. There are huge dollar earnings for India. Further, India is also proving to be a worthy manufacturing hub for many companies. All these factors played a positive role in building up of huge foreign exchange reserves.Q.During the economic crisis of 1990s, India opted for which of the following foreign exchange measure?a)Devaluation of Currencyb)Moving towards market-based determination of exchange ratec)Both (a) and (b)d)None of the aboveCorrect answer is option 'C'. Can you explain this answer? tests, examples and also practice Class 12 tests.
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