Q. With reference to Internationalization of the rupee, consider the following statements:
1.It will increase the requirement for the authorities to maintain large foreign exchange reserves in foreign currencies to manage external vulnerabilities.
2.It will increase the cost of doing business for the private sector.
3.The rupee is fully convertible in the capital account..
How many of the above statements are correct?
Answer: D
Notes:
Explanation –
Statements 1, 2 and 3 are incorrect. The internationalisation of a currency reduces the requirement for the authorities to maintain large foreign exchange reserves in foreign currencies to manage external vulnerabilities. Internationalization of the rupee may reduce the cost of doing business. The rupee is not fully/partially convertible in the capital account while it is fully convertible in the current account.
Source: ForumIAS
