Question

10. In which of the following central bank does not maintain any reserves of foreign currency.
a. fixed exchange rate b. Flexible exchange rate
c. Managed floating d. none of the above​

Answer 1

Answer:

d. none of the above............

Answer 2

Central bank does not maintain any reserves of foreign currency in floating exchange rate system.

• Foreign exchange reserves are the foreign currencies that the central bank of a nation holds. They are the contingency funds of a nation in the event of an emergency, such as a swift devaluation of its currency.
• These include the banknotes, bonds, deposits, treasury bills, and other government securities.
• The central bank does not hold any foreign currency reserves as the market moves automatically to decide the exchange rate guided by the market.