ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Foreign exchange transactions which are dependent on other foreign exchange transactions are known as accommodating transactions. These transactions are international economic transactions that are not made with a profit motive such as government financing.

Detailed explanation-2: -Foreign exchange transactions dependent on other foreign exchange transactions other than Autonomous transactions are called ‘Accommodating transactions’.

Detailed explanation-3: -Accommodating transactions compensate the surplus or deficit brought about by autonomous transactions. It seeks to bring equality between the payments and receipts of foreign exchange. Usually we have BOP deficit and that is accommodated by bringing in flow. of foreign exchange in the form of FDI/ loan from IMF etc.

Detailed explanation-4: -Accommodating transactions are compensating capital transactions which are meant to correct the disequilibrium in autonomous items of balance of payments. For example, if there is a current account deficit in the BOP, then this deficit is settled by capital inflow from abroad.