BANKING GENERAL KNOWLEDGE
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
Back liablities on their own
|
|
|
Influence Monetary policy
|
|
|
Both 1 and 2
|
|
|
None of the above.
|
Detailed explanation-1: -Purpose of keeping foreign exchange reserves To keep the value of their currencies at a fixed rate. Countries with a floating exchange rate system use forex reserves to keep the value of their currency lower than the US Dollar. To maintain liquidity in case of an economic crisis.
Detailed explanation-2: -Foreign-exchange reserves act as the first line of defense for India in case of economic slowdown, but acquisition of reserves has its own costs. Foreign exchange reserves facilitate external trade and payment and promote orderly development and maintenance of foreign exchange market in India.
Detailed explanation-3: -Definition: Forex reserves are foreign currency assets held by the central banks of countries. Description: These assets include foreign marketable securities, monetary gold, special drawing rights (SDRs) and reserve position in the IMF.