Understanding Foreign Exchange Reserves
The question asks to identify the term for foreign currency assets held by central banks.
Defining Foreign Exchange Reserves
Foreign exchange reserves are financial assets denominated in a foreign currency (like USD, EUR, JPY) held by a country's central bank.
- These assets include foreign banknotes, bank deposits, treasury bills, and other government securities.
- Central banks hold these reserves to manage their country's exchange rate, maintain economic stability, and facilitate international trade and investment.
Analyzing Other Options
- Rate exchange: This refers to the value of one currency in relation to another, not the assets themselves.
- Credit control: These are tools central banks use to manage the money supply and interest rates, not reserve assets.
- Local exchange: This pertains to domestic currency or transactions within a country.
Therefore, the correct term for foreign currency assets held by central banks is Foreign exchange Reserves.
Important Questions from External Sector
Which function is used to calculate the maximum value in a selected column in MS Excel?
In relation to the balance of payments, a __________ deals with foreign exchange reserves, investments, loans, and borrowings.
Which one of the following is an element of capital account in the Balance of Payments?
The ____ Oversees the Foreign Exchange Management Act, 1999.
In 1991, under the external sector reforms, Indian rupee ______.
