Class 12 Exam  >  Class 12 Questions  >  Explain the determinations of exchange rate i... Start Learning for Free
Explain the determinations of exchange rate in a free play market. ?
Verified Answer
Explain the determinations of exchange rate in a free play market. ?
Aside from factors such as interest rates and inflation, the currency exchange rate is one of the most important determinants of a country's relative level of economic health. Exchange rates play a vital role in a country's level of trade, which is critical to most every free market economy in the world.
This question is part of UPSC exam. View all Class 12 courses
Explore Courses for Class 12 exam

Similar Class 12 Doubts

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?

Explain the determinations of exchange rate in a free play market. ?
Question Description
Explain the determinations of exchange rate in a free play market. ? 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 Explain the determinations of exchange rate in a free play market. ? covers all topics & solutions for Class 12 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Explain the determinations of exchange rate in a free play market. ?.
Solutions for Explain the determinations of exchange rate in a free play market. ? in English & in Hindi are available as part of our courses for Class 12. Download more important topics, notes, lectures and mock test series for Class 12 Exam by signing up for free.
Here you can find the meaning of Explain the determinations of exchange rate in a free play market. ? defined & explained in the simplest way possible. Besides giving the explanation of Explain the determinations of exchange rate in a free play market. ?, a detailed solution for Explain the determinations of exchange rate in a free play market. ? has been provided alongside types of Explain the determinations of exchange rate in a free play market. ? theory, EduRev gives you an ample number of questions to practice Explain the determinations of exchange rate in a free play market. ? tests, examples and also practice Class 12 tests.
Explore Courses for Class 12 exam
Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
10M+ students study on EduRev