According to LERMS policy,what percentage of foreign exchange earnings was required to exchange at the official exchange rate as determined by the RBI?
Show answer & explanation
Correct answer: D
Explanation
The correct answer is option 4 i.e. 40%.
According to the Liberalized Exchange Rate Management System (LERMS) policy, introduced in 1992, 40% of foreign exchange earnings were required to be exchanged at the official exchange rate as determined by the Reserve Bank of India (RBI). The remaining 60% could be sold at market-determined rates. This policy was aimed at providing more flexibility in the foreign exchange market while gradually moving towards a more liberalized exchange rate system.