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प्रश्न
Briefly discuss the fixed exchange rate system of determining foreign exchange rate.
उत्तर
In a fixed exchange rate system, the Central Bank sets the official exchange rate. Such an exchange rate remains constant regardless of changes in foreign currency demand and supply. To keep the currency exchange rate stable, the Central Bank purchases foreign currency when the rate rises and sells it when the rate falls. This procedure is also known as pegging; hence, the fixed exchange rate system is sometimes referred to as the pegged exchange rate system.
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संबंधित प्रश्न
(a) In which sub-account and on which side of balance of payments account will foreign investments in India be recorded? Given reasons.
(b)What will be the effect of foreign investments in India on exchange rate? Explain.
Recently Government of India has doubled the import duty on gold. What impact is it likely to have on foreign exchange rate and how?
How can increase in foreign direct investment affect the price of foreign exchange?
Other things remaining the same, when the foreign currency becomes cheaper, the effect on national income is likely to be : (Choose the correct alternative)
a. Positive
b. Negative
c. Positive and negative both
d. No effect
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The government has started promoting foreign capital. What is its economic value in the context of Production Possibilities Frontier?
The foreign exchange rate in India is on the rise recently. What impact is it likely to have on exports and how?
What is 'appreciation' of domestic currency? What is its likely effect on exports and how?
Discuss briefly the concept of managed floating system of foreign exchange rate determination.
How is the rate of exchange determined in a flexible exchange rate system?
Suppose it takes 1.25 yen to buy a rupee, and the price level in Japan is 3 and the price level in India is 1.2 Calculate the real exchange rate between India and Japan (the price of Japanese goods in terms of Indian goods).
Foreign Exchange Thansactions which are independent of other transactions in the Balance of Payments Account are called:
When domestic currency loses its value in relation to a foreign currency in the international money market, it is a situation of:
Foreign exchange refers to:
Suppose the exchange rate was \[\ce{$}\]1 = ₹ 80 and later changed to \[\ce{$}\]1 = ₹ 92. What will be its effect on the following?
Export of cotton garments by India to the USA
Suppose the exchange rate was \[\ce{$}\]1 = ₹ 80 and later changed to \[\ce{$}\]1 = ₹ 92. What will be its effect on the following?
Export of technical knowledge by the USA to India
Suppose the exchange rate was \[\ce{$}\]1 = ₹ 80 and later changed to \[\ce{$}\]1 = ₹ 92. What will be its effect on the following?
Import of wheat by India from the USA
Suppose the exchange rate was \[\ce{$}\]1 = ₹ 80 and later changed to \[\ce{$}\]1 = ₹ 92. What will be its effect on the following?
Import of gold jewellery by the USA from India
State whether the following items will be included in the estimation of National Income or not: Give a reason for your answer.
Profit earned by State Bank of India in a foreign country.
