Question

. Which of the following steps should be taken by the central bank if there is excessive rise in
the foreign exchange rate?
(a) supply foreign exchange from its stock
(b) demand more of the foreign exchange
(c)not intervene in the market as exchange rate is determined by the market forces
(d)help the central goverment to stabilize the foreign exchange rate​

Answer 1

Answer:

please do this questions

Answer 2

Following steps should be taken by Central bank if there is excessive rise in the foreign exchange rate:

• Foreign exchange intervention refers to efforts by central banks to stabilize a currency.

• Central bank intervent in foreign exchange market just because to stabilize our own currencies.

• Central bank can start selling the foreign currency out of its reserve to increase its the supply.

• If Central bank wishes to prop up rupee value, then it can sell foreign currency and when it needs to bring down rupee value, it can buy foreign currency.

So, here (a) supply foreign exchange from its stock is the correct option.