The foreign exchange reserve of India dropped to levels that were ______ during 1991 economic crisis.
not sufficient for even a fortnight
In 1991 India faced a severe balance of payments crisis caused by high fiscal deficits, rising oil prices after the Gulf War and falling remittances.
Foreign exchange reserves fell to about US$ 1 billion, a level that was not sufficient for even a fortnight (about two weeks) of essential imports.
To avoid default the government pledged gold and then launched the LPG (liberalisation, privatisation, globalisation) reforms. Twenty, thirty or fifty days overstate how low the reserves had fallen.
Hence, not sufficient for even a fortnight.
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(1) Hike in global oil prices can widen the Current Account Deficit (CAD) of India.
(2) Higher CAD can lead to depreciation of the currency.
Which among the above statements is/are correct?
Which of the following affect the pricing of a currency option?
(A) Spot exchange rate
(B) Exercise rate
(C) Foreign risk-free rate of return
(D) Domestic risk-adjusted rate
(E) Time to expiration
Choose the correct answer from the options given below:
