If the rupee is rapidly depreciating, RBI is likely to sell dollars in the market.If the inflation is too high, Reserve Bank of India (RBI) is likely to buy government securities.With reference to the Indian economy, consider the following statements: IAS 2021: Open Prelims Test Series (Mock Test - 8) #Que No.12ģ.IAS 2022: Target PT (Test - 24 (Economy - 5) #Que No.14.Reflection from GS SCORE Test Series & Study Material: What is real effective exchange rate (REER)? – IMF DATA Help.Increasing trend in domestic inflation relative to inflation in other countries creates a divergence in NEER and REER. The REER is the weighted average of NEER adjusted by the ratio of domestic price to foreign prices. Statement 3 is correct: NEER is the weighted geometric average of the bilateral nominal exchange rates of the home currency in terms of foreign currencies.Statement 2 is incorrect: An increase in REER implies that exports become more expensive and imports become cheaper therefore, an increase indicates a loss in trade competitiveness.An increase in NEER indicates appreciation of rupee. Statement 1 is correct: NEER is a measure of value of a currency against a weighted average of several foreign currency.Which of the above statements are correct? An increasing trend in domestic inflation relative to inflation in other countries is likely to cause an increasing divergence between NEER and REER.An increase in the Real Effective Exchange Rate (REER) indicates an improvement in trade competitiveness.An increase in Nominal Effective Exchange Rate (NEER) indicates the appreciation of rupee.For higher income countries that are non-PRGT eligible, a similar Rapid Financing Instrument (RFI) is available.Ģ. Access under the RCF is subject to annual and cumulative limits, with higher access limits applying for the large natural disaster window. There are three windows under RCF: (i) a “regular window” for urgent BoP needs caused by wide range of sources including domestic instability, emergencies and fragility (ii) an “exogenous shock window” for urgent BoP needs caused by a sudden, exogenous shock and (iii) a “large natural disaster window” for urgent BoP needs arising from natural disasters where damage is assessed to be equivalent to or exceed 20 percent of the member’s GDP. The RCF was created under the Poverty Reduction and Growth Trust (PRGT) as part of a broader reform to make the Fund’s financial support more flexible and better tailored to the diverse needs of LICs, including in times of crisis. The Rapid Credit Facility (RCF) provides rapid concessional financial assistance to low-income countries (LICs) facing an urgent balance of payments (BoP) need with no ex post conditionality where a full-fledged economic program is neither necessary nor feasible. The RFI replaced the IMF’s previous emergency assistance policy and can be used in a wide range of circumstances. The RFI was created as part of a broader reform to make the IMF’s financial support more flexible to address the diverse needs of member countries. The Rapid Financing Instrument (RFI) provides rapid financial assistance, which is available to all member countries facing an urgent balance of payments need. (c) United Nations Environment Programme Finance Initiative “Rapid Financing Instrument” and “Rapid Credit Facility” are related to the provisions of lending by which one of the following? GS Analyst: Current Affairs Classes Newġ.Good Practice - Examples & Case Studies New.2 Year Integrated Test Series (Pre-Cum-Mains).2 Year Integrated (Pre-Cum-Mains) Test Series.1 Year Integrated (Pre-Cum-Mains) Test Series New.Public Administration Q - Course 2022 New.GS Analyst: Weekly Current Affairs Classes New.GS Mains Classes 2023 (Basic to Advance).
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