ECONOMICS
FOREIGN CURRENCY MARKETS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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RBI-Reserve Bank of India
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DGFT-Director General of Foreign Trade
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FEDAI-Foreign Exchange Dealers Association of India
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SEBI-Securities & Exchange Board of India
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Detailed explanation-1: -Within the contours of the Regulations, Reserve Bank of India also issues directions to Authorised Persons under Section 11 of the Foreign Exchange Management Act (FEMA), 1999.
Detailed explanation-2: -The Reserve Bank’s exchange rate policy focusses on ensuring orderly conditions in the foreign exchange market. For the purpose, it closely monitors the developments in the financial markets at home and abroad. When necessary, it intervenes in the market by buying or selling foreign currencies.
Detailed explanation-3: -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.
Detailed explanation-4: -Who are authorized by the Reserve Bank to sell foreign exchange for travel purposes? Ans. Foreign exchange can be purchased from any authorised person, such as an AD Category-I bank and AD Category II. Full-Fledged Money Changers (FFMCs) are also permitted to release exchange for business and private visits.