Question

“Considering the depreciation of Indian Currency (₹) in the international market, the Reserve Bank of India (RBI) has decided to purchase Indian currency (₹) in the open market.”

This represents ______ exchange rate system.

विकल्प

• fixed

• flexible

• managed floating

• manipulated

Answer 1

“Considering the depreciation of Indian Currency (₹) in the international market, the Reserve Bank of India (RBI) has decided to purchase Indian currency (₹) in the open market.”

This represents managed floating exchange rate system.

Explanation:

Managed floating occurs when the RBI occasionally intervenes in the open market by purchasing and selling Indian currency in order to influence the foreign exchange rate. A managed floating exchange rate system's principal purpose is to reconcile the benefits of exchange rate flexibility with the necessity for exchange rate stability.