Question
Which one of the following is not the possible reasons
for the Decline in India’s Forex Reserves?Solution
India’s forex reserves have fallen by USD 110 billion since September 2021 where it stood at a record high of USD 642.45 billion. It needs to be noted that Indian rupee is a freely floating currency, and its exchange rate is market determined. The RBI does not have any fixed exchange rate. Despite this drastic decline, India has been faring much better than several reserve currencies, EMEs (emerging market economies) and its Asian peers.
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