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Consider the following statements regarding Currency Swap Agreement.
- A currency swap is a transaction in which two parties exchange an equivalent amount of money with each other but in different currencies.
- Currency swap agreements between countries help in reducing its reliance on the International Monetary Fund.
- Currency swap agreement will help a country tide over its foreign exchange crisis.
Which of the above statements is/are correct?
- a)1, 2
- b)1, 3
- c)2, 3
- d)1, 2, 3
Correct answer is option 'D'. Can you explain this answer?
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Most Upvoted Answer
Consider the following statements regarding Currency Swap Agreement. A...
A currency swap is a transaction in which two parties exchange an equivalent amount of money with each other but in different currencies. The parties are essentially loaning each other money and will repay the amounts at a specified date and exchange rate. The purpose could be to hedge exposure to exchange-rate risk, to speculate on the direction of a currency, or to reduce the cost of borrowing in a foreign currency.
Currency swap agreements between countries help in reducing its reliance on the International Monetary Fund.
Currency swap agreements between countries help in reducing its reliance on the International Monetary Fund.
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Consider the following statements regarding Currency Swap Agreement. A...
Explanation:
Currency Swap Agreement is a financial agreement between two parties, usually countries, to exchange a specified amount of one currency for another currency at a pre-determined exchange rate. It is a type of derivative contract that allows both parties to access foreign currency funds without actually having to borrow or lend in that currency.
Statement 1: A currency swap is a transaction in which two parties exchange an equivalent amount of money with each other but in different currencies.
This statement is correct. In a currency swap agreement, two parties agree to exchange a specified amount of one currency for an equivalent amount of another currency. The exchange takes place at a pre-determined exchange rate.
Statement 2: Currency swap agreements between countries help in reducing its reliance on the International Monetary Fund.
This statement is correct. Currency swap agreements between countries can help reduce their reliance on the International Monetary Fund (IMF) for financial assistance during times of crisis. By entering into currency swap agreements, countries can access foreign currency liquidity from their swap partner, which can help stabilize their foreign exchange reserves and mitigate the need for IMF intervention.
Statement 3: Currency swap agreement will help a country tide over its foreign exchange crisis.
This statement is correct. Currency swap agreements can be particularly beneficial for countries facing foreign exchange crises. During a crisis, a country may experience a shortage of foreign currency reserves, making it difficult to meet its external obligations. By entering into a currency swap agreement, the country can access foreign currency liquidity from its swap partner, helping it meet its immediate foreign exchange needs and tide over the crisis.
Therefore, all three statements are correct. Currency swap agreements facilitate the exchange of currencies between parties, reduce reliance on the IMF, and help countries overcome foreign exchange crises.
Currency Swap Agreement is a financial agreement between two parties, usually countries, to exchange a specified amount of one currency for another currency at a pre-determined exchange rate. It is a type of derivative contract that allows both parties to access foreign currency funds without actually having to borrow or lend in that currency.
Statement 1: A currency swap is a transaction in which two parties exchange an equivalent amount of money with each other but in different currencies.
This statement is correct. In a currency swap agreement, two parties agree to exchange a specified amount of one currency for an equivalent amount of another currency. The exchange takes place at a pre-determined exchange rate.
Statement 2: Currency swap agreements between countries help in reducing its reliance on the International Monetary Fund.
This statement is correct. Currency swap agreements between countries can help reduce their reliance on the International Monetary Fund (IMF) for financial assistance during times of crisis. By entering into currency swap agreements, countries can access foreign currency liquidity from their swap partner, which can help stabilize their foreign exchange reserves and mitigate the need for IMF intervention.
Statement 3: Currency swap agreement will help a country tide over its foreign exchange crisis.
This statement is correct. Currency swap agreements can be particularly beneficial for countries facing foreign exchange crises. During a crisis, a country may experience a shortage of foreign currency reserves, making it difficult to meet its external obligations. By entering into a currency swap agreement, the country can access foreign currency liquidity from its swap partner, helping it meet its immediate foreign exchange needs and tide over the crisis.
Therefore, all three statements are correct. Currency swap agreements facilitate the exchange of currencies between parties, reduce reliance on the IMF, and help countries overcome foreign exchange crises.
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Consider the following statements regarding Currency Swap Agreement. A currency swap is a transaction in which two parties exchange an equivalent amount of money with each other but in different currencies. Currency swap agreements between countries help in reducing its reliance on the International Monetary Fund. Currency swap agreement will help a country tide over its foreign exchange crisis.Which of the above statements is/are correct?a)1, 2b)1, 3c)2, 3d)1, 2, 3Correct answer is option 'D'. Can you explain this answer?
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Consider the following statements regarding Currency Swap Agreement. A currency swap is a transaction in which two parties exchange an equivalent amount of money with each other but in different currencies. Currency swap agreements between countries help in reducing its reliance on the International Monetary Fund. Currency swap agreement will help a country tide over its foreign exchange crisis.Which of the above statements is/are correct?a)1, 2b)1, 3c)2, 3d)1, 2, 3Correct 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 Consider the following statements regarding Currency Swap Agreement. A currency swap is a transaction in which two parties exchange an equivalent amount of money with each other but in different currencies. Currency swap agreements between countries help in reducing its reliance on the International Monetary Fund. Currency swap agreement will help a country tide over its foreign exchange crisis.Which of the above statements is/are correct?a)1, 2b)1, 3c)2, 3d)1, 2, 3Correct 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 Consider the following statements regarding Currency Swap Agreement. A currency swap is a transaction in which two parties exchange an equivalent amount of money with each other but in different currencies. Currency swap agreements between countries help in reducing its reliance on the International Monetary Fund. Currency swap agreement will help a country tide over its foreign exchange crisis.Which of the above statements is/are correct?a)1, 2b)1, 3c)2, 3d)1, 2, 3Correct answer is option 'D'. Can you explain this answer?.
Consider the following statements regarding Currency Swap Agreement. A currency swap is a transaction in which two parties exchange an equivalent amount of money with each other but in different currencies. Currency swap agreements between countries help in reducing its reliance on the International Monetary Fund. Currency swap agreement will help a country tide over its foreign exchange crisis.Which of the above statements is/are correct?a)1, 2b)1, 3c)2, 3d)1, 2, 3Correct 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 Consider the following statements regarding Currency Swap Agreement. A currency swap is a transaction in which two parties exchange an equivalent amount of money with each other but in different currencies. Currency swap agreements between countries help in reducing its reliance on the International Monetary Fund. Currency swap agreement will help a country tide over its foreign exchange crisis.Which of the above statements is/are correct?a)1, 2b)1, 3c)2, 3d)1, 2, 3Correct 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 Consider the following statements regarding Currency Swap Agreement. A currency swap is a transaction in which two parties exchange an equivalent amount of money with each other but in different currencies. Currency swap agreements between countries help in reducing its reliance on the International Monetary Fund. Currency swap agreement will help a country tide over its foreign exchange crisis.Which of the above statements is/are correct?a)1, 2b)1, 3c)2, 3d)1, 2, 3Correct answer is option 'D'. Can you explain this answer?.
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