The Reserve Bank of India, is the custodian of the country's foreign exchange reserves and is vested with the responsibility of managing their investment. The legal provisions governing management of foreign exchange reserves are laid down in the Reserve Bank of India Act, 1934.
What is the exchange rate regime in India?
- The exchange rate regime in India can best be characterised as 'intermediate' between fully managed and freely floating regimes. Exchange rate policy is generally viewed as subserving the monetary policy stance.
What is the role of Reserve Bank of India in forex?
- In substantive terms, the Reserve Bank functions as the custodian and manager offorex reserves, and operates within the overall policy framework agreed upon with Government of India. Why Hold Forex Reserves? Technically, it is possible to consider three motivesi.e.,transaction, speculative and precautionary motives for holding reserves.
Is the exchange rate policy in India supportive of external sector target?
- The results of the study indicate that the exchange rate policy in India has been actively supportive of the external sector target in terms of a sustainable level of current account deficit. Section V Conclusion
Why do countries use international reserves for monetary base?
- Few countries explicitly use international reserves as the backing for monetary base and to maintain the stability and integrity of the monetary and financial system.
The correct answer is Reserve Bank of India. In India, the Reserve Bank of India Act 1934 contains the enabling provisions for the Reserve Bank to act as the custodian of foreign reserves, and manage reserves with defined objectives.