ECONOMICS
FOREIGN CURRENCY MARKETS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Reserve Bank of India
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State Bank of India
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Ministry of Finance, Government of India
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Export-Import Bank of India
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Detailed explanation-1: -The Reserve Bank of India, is the custodian of the country’s foreign exchange reserves and is vested with the responsibility of managing their investment. The legal provisions governing management of foreign exchange reserves are laid down in the Reserve Bank of India Act, 1934.
Detailed explanation-2: -Purpose of keeping foreign exchange reserves To maintain liquidity in case of an economic crisis. The central bank (RBI) supplies foreign currency to keep markets steady. To ensure that a country meets its foreign obligations and liabilities.
Detailed explanation-3: -The Central bank exercises control over the foreign reserves to meet the deficit in the balance of payments and to maintain the international liquidity.
Detailed explanation-4: -Custodian-The RBI acts as the custodian of the country’s foreign exchange reserves and manages exchange control. It dominates the market as a regulator, a player and the jury. Dollar/rupee rate-The RBI Act stipulates that the Central Government orders the rate at which the RBI shall buy or sell forex to banks.