ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Exports, direct purchases, and remittances from abroad are sources of supply of foreign currency.

Detailed explanation-2: -Foreign exchange earnings are profits made from selling goods and services in a global marketplace, though in some cases, currency is simply exchanged in order to make these earnings without goods or services being sold.

Detailed explanation-3: -Exchange rates of a currency can be either fixed or floating. Fixed exchange rate is determined by the central bank of the country while the floating rate is determined by the dynamics of market demand and supply.

Detailed explanation-4: -a) To purchase goods and services from foreign countries. b) To purchase financial assets in a foreign countries. c) To invest directly in shops, factories, building in foreign countries. d) To speculate on the value of foreign currencies.

Detailed explanation-5: -Investment outflows and repayment of international loans are sources of demand for foreign currency.