Forex Reserves of India and Forex Management

6. What is the significance of Forex Reserves for a country’s economy?
a. It indicates the country’s borrowing capacity from international markets
b. It enhances the country’s credit rating
c. It provides a buffer against external shocks and economic crises
d. It boosts the country’s exports

7. Which country holds the highest Forex Reserves in the world?
a. United States
b. China
c. Japan
d. India

8. What is the current approximate value of India’s Forex Reserves (as of 2021)?
a. $500 billion
b. $1 trillion
c. $2 trillion
d. $5 trillion

9. What is the main source of India’s Forex Reserves?
a. Remittances from NRIs
b. Export earnings
c. Foreign direct investment
d. External borrowings

10. Which of the following statements is true regarding the management of Forex Reserves in India?
a. The RBI invests Forex Reserves primarily in domestic infrastructure projects.
b. Forex Reserves are invested in a diversified portfolio of assets to ensure safety and liquidity.
c. Forex Reserves are solely used to repay external debt obligations.
d. Forex Reserves are utilized for speculative currency trading activities.