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प्रश्न
"Under the flexible exchange rate system, the Central Bank does not intervene in the foreign exchange market."
Justify the statement, giving valid arguments.
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उत्तर
Yes, the Central Bank does not intervene in the currency market under the flexible exchange rate regime.
- The exchange rate is determined by market forces, such as demand and supply of foreign money, in a flexible exchange rate system.
- The rise in the foreign exchange rate is caused by an increase in demand and a decrease in supply of foreign currency.
- The reduction in the foreign exchange rate is caused by a decrease in demand and an increase in supply of foreign exchange.
- Imports, direct purchases overseas, investment in the rest of the globe, repayment of international debts, and other factors influence forex demand.
- The supply of currency is determined by factors such as exports, direct purchases by the rest of the world, loans from the rest of the world, and so on.
संबंधित प्रश्न
Suppose the exchange rate between the Rupee and the dollar was Rs. 30=1$ in the year 2010. Suppose the prices have doubled in India over 20 years while they have remained fixed in USA. What, according to the purchasing power parity theory will be the exchange rate between dollar and rupee in the year 2030.
______ occurs when the currency exchange rate is officially lowered under a fixed exchange rate system.
______ system allows continuous and regular adjustments in the exchange rate.
In a system of flexible exchange rates, the exchange rate is determined by the forces of ______
Explain the impact of home currency depreciation on the exports of a nation.
Suppose, the price of one UK Pound (£) has increased from ₹ 70 to ₹ 80, owing to market forces.
This means that value of Indian Currency (₹) has ______.
What is the rate at which one currency is exchanged for another in the foreign exchange market?
Under the Fixed Exchange Rate System, the exchange rate is determined by whom?
How does RBI maintain a fixed rate in a Fixed Exchange Rate System?
A rise in domestic currency value under a Fixed Exchange Rate System is called what?
If demand for foreign currency decreases, what happens to the exchange rate and domestic currency?
Higher domestic interest rates attract foreign investment and increase demand for which currency?
Which historical fixed exchange rate system was established in 1944?
Under the Bretton Woods System, countries fixed their currencies against which currency?
