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    Question

    Which of the below mentioned steps are likely to cause the appreciation of rupee against dollar?

    1. Increase limit of FPI in Indian Bond market.

    2. Currency Swap Agreements with other countries.

    3. Increase threshold for External Commercial borrowings.

    4. Dollar Swap between RBI and the Indian banks.

    5. Dear Money Policy of RBI.

    Select the correct answer using the codes given below:

    A 1, 2, 3, and 4 only Correct Answer Incorrect Answer
    B 1, 3, 4, and 5 only Correct Answer Incorrect Answer
    C 2, 3, 4, and 5 only Correct Answer Incorrect Answer
    D 1, 2, 3, 4, and 5 Correct Answer Incorrect Answer

    Solution

    The depreciation of Indian currency is good for the exporters while adversely impacts the importers. Hence, certain measures are adopted to bring about appreciation of the rupee when there is too much depreciation observed. The appreciation of Indian rupee can be achieved simply by decreasing its supply since reduced supply with constant demand would certainly push the prices up.

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