What is foreign exchange rate?
Show answer & explanation
Correct answer: A
Explanation
Correct Answer:
Option 1: It is the price of one currency in terms of another.
Explanation:
The foreign exchange rate is the rate at which one country's currency is converted into another country's currency. For example, if 1 dollar = 80 rupees, it means that 80 Indian rupees are available for 1 US dollar. This rate is extremely important for international trade, investment, and economic stability. It is influenced by demand and supply, economic conditions, inflation, and government policies.
Additional Facts:
Option 1: Correct answer.
Option 2: It is the bank interest rate.
Option 3: Import value is a different concept.
Option 4: IMF interest is a different topic.
Possible questions for the upcoming exam:
Question: What does the RBI do?
Answer: Currency control
Question: What is the IMF?
Answer: International organization
Question: What is currency devaluation?
Answer: Decreasing the value of a currency
Question: What does the exchange rate depend on?
Answer: Demand and supply