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    Question

    Which one of the following is not the possible reasons

    for the Decline in India’s Forex Reserves?
    A The RBI does not have any fixed exchange rate. Correct Answer Incorrect Answer
    B India has been faring much better than several reserve currencies. Correct Answer Incorrect Answer
    C Indian rupee is a freely floating currency. Correct Answer Incorrect Answer
    D Emerging of new western economy. Correct Answer Incorrect Answer
    E India rupee exchange rate is market determined. Correct Answer Incorrect Answer

    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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