BANKING AFFAIRS

BANKING GENERAL KNOWLEDGE

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Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]

Which one of the following may be the consequence of buying forex in the market by the RBI?

A	It leads to inflation
B	It leads to control over inflation
C	It does not affect inflation
D	It results into deflation

Explanation:

Detailed explanation-1: -The interventions in the forex market are undertaken by the Reserve Bank of India (RBI) as part of the stated policy to contain volatility, without aiming for a target level or band.

Detailed explanation-2: -The three types of foreign exchange risk include transaction risk, economic risk, and translation risk. Foreign exchange risk is a major risk to consider for exporters/importers and businesses that trade in international markets.

Detailed explanation-3: -What Is Trade Liberalization? Trade liberalization is the removal or reduction of restrictions or barriers on the free exchange of goods between nations. These barriers include tariffs, such as duties and surcharges, and nontariff barriers, such as licensing rules and quotas.

Detailed explanation-4: -The Reserve Bank regulates money markets, Government Securities (G-Sec) market, foreign exchange (Forex) market and the markets for derivatives on interest rate, currency and credit derivatives.

There is 1 question to complete.