SSC CPO 2025 PYQ — Question 90

Correct Answer: Rupees are not accepted in American markets.

Explanation:

• Legal Tender: Every country possesses its own official currency, which is legally accepted for transactions within its markets. India's currency is the Rupee (INR), whereas the official currency of the United States is the US Dollar (USD).
• Acceptability: American vendors or stores do not accept Indian Rupees as a form of payment because they are not in local circulation there. Therefore, to complete a purchase, an Indian buyer must convert their currency into Dollars.
• Foreign Exchange (Forex): This process is facilitated through banks or authorized dealers, where Dollars are provided in exchange for Rupees based on the prevailing 'Exchange Rate.'

Key Facts Regarding International Transactions:

• Foreign Exchange Reserves: When we make payments in Dollars, it impacts the country's 'Foreign Exchange Reserves.'
• Credit/Debit Cards: During international transactions, banks automatically convert Rupees into the corresponding foreign currency, for which they charge a 'Markup Fee.'

Important Questions for Upcoming Examinations:

• Question: Who manages India's foreign exchange reserves?
• Answer: The Reserve Bank of India (RBI).
• Question: What is the meaning of 'Convertibility'?
• Answer: The permission to easily exchange one country's currency for another country's currency.
• Question: Which is currently the world's most prominent 'Reserve Currency'?
• Answer: The US Dollar (USD).