- Forex reserves reflect a country's holdings of foreign currencies, gold, SDRs, and Reserve Tranche Position in the IMF. - They increase due to net foreign currency inflows from sources like trade surplus (exports > imports), capital account surplus (FDI, FII, external borrowings, NRI deposits), and remittances. - RBI's intervention in the forex market (buying foreign currency) to prevent appreciation of the Rupee also contributes to reserve accumulation.
The Forex Reserves in India have been witnessing continuous growth due to following reasons: 1. Rise in FDI inflows 2. Gifts from Foreign Countries 3. High interest regime in the country 4. Huge inflows of Flls funds 5. Remittances from Indians working abroad Select the correct answer from the given code : Code:
Asked in UPPSC Upper Mains 2007 · Topic: Foreign Exchange Market and Exchange Rate Determination (Factors Influencing Exchange Rate Movements: Interest Rates, Inflation, Trade Balance, Capital Flows, Speculation)
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Answer: A. 1, 3, 4, 5
Read the notes: Foreign Exchange Market and Exchange Rate Determination →
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