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Consider the following statements with respect to currency swap agreements:
1. It is an agreement between the central banks of the two countries.
2. One country exchanges its national currency for that of another or even a third one.
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 'C'. Can you explain this answer?
Verified Answer
Consider the following statements with respect to currency swap agreem...
- Currency Swap Agreement:
- The currency swap agreement between the two countries is entered between the Central Banks of the two countries. Hence, statement 1 is correct.
- One country exchanges its national currency for that of another or even a third one. Hence, statement 2 is correct.
- Examples: India and Japan signed a currency swap agreement in 2018 worth $ 75 billion. India can/will get Yen(or dollars) from Japan worth a max of $ 75 billion and Japan will get equivalent Indian Rupees as per the market exchange rate at the time of transaction.
- In July 2020, India and Sri Lanka signed a currency swap agreement worth $ 400 million in which India will give dollars to SL and in return India will get a ‘Sri Lankan Rupee’.
Most Upvoted Answer
Consider the following statements with respect to currency swap agreem...
Explanation:
Central Banks Involvement:
- Currency swap agreements are indeed agreements between the central banks of two countries.
- These agreements are typically used to facilitate trade and investment between the two countries by providing access to each other's currencies.
Exchange of National Currency:
- In a currency swap agreement, one country exchanges its national currency for that of another country, and sometimes even for a third currency.
- This exchange helps in reducing the risk associated with fluctuations in exchange rates and can also help in stabilizing the economies of the two countries involved.
Correct Answer:
- Both statements 1 and 2 are correct, as currency swap agreements involve central banks and the exchange of national currencies between countries.
Therefore, the correct answer is option C) Both 1 and 2.
Central Banks Involvement:
- Currency swap agreements are indeed agreements between the central banks of two countries.
- These agreements are typically used to facilitate trade and investment between the two countries by providing access to each other's currencies.
Exchange of National Currency:
- In a currency swap agreement, one country exchanges its national currency for that of another country, and sometimes even for a third currency.
- This exchange helps in reducing the risk associated with fluctuations in exchange rates and can also help in stabilizing the economies of the two countries involved.
Correct Answer:
- Both statements 1 and 2 are correct, as currency swap agreements involve central banks and the exchange of national currencies between countries.
Therefore, the correct answer is option C) Both 1 and 2.
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Consider the following statements with respect to currency swap agreements:1. It is an agreement between the central banks of the two countries.2. One country exchanges its national currency for that of another or even a third one.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 'C'. Can you explain this answer?
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Consider the following statements with respect to currency swap agreements:1. It is an agreement between the central banks of the two countries.2. One country exchanges its national currency for that of another or even a third one.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 'C'. 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 Consider the following statements with respect to currency swap agreements:1. It is an agreement between the central banks of the two countries.2. One country exchanges its national currency for that of another or even a third one.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 'C'. Can you explain this answer? covers all topics & solutions for UPSC 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Consider the following statements with respect to currency swap agreements:1. It is an agreement between the central banks of the two countries.2. One country exchanges its national currency for that of another or even a third one.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 'C'. Can you explain this answer?.
Consider the following statements with respect to currency swap agreements:1. It is an agreement between the central banks of the two countries.2. One country exchanges its national currency for that of another or even a third one.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 'C'. 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 Consider the following statements with respect to currency swap agreements:1. It is an agreement between the central banks of the two countries.2. One country exchanges its national currency for that of another or even a third one.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 'C'. Can you explain this answer? covers all topics & solutions for UPSC 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Consider the following statements with respect to currency swap agreements:1. It is an agreement between the central banks of the two countries.2. One country exchanges its national currency for that of another or even a third one.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 'C'. Can you explain this answer?.
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