Indian investors lend abroad. Answer the following questions :
(a) In which sub-account and on which side of the Balance of Payments Account such lending is recorded? Give reasons.
(b) Explain the impact of the lending on market exchange rate.
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Foreign exchange transactions which are independent of other transactions in the Balance of Payments Account are called : (Choose the correct alternative)
(a) Current transactions
(b) Capital transactions
(c) Autonomous transactions
(d) Accommodating transactions
Indian investors borrow from abroad. Answer the following:
a. In which sub-account and on which side of the Balance of Payments Account will this borrowing be recorded? Give reason.
b. Explain what is the impact of this borrowing on exchange rate.