1.

Concept of Exchange Rate

Answer»

The rate at which the currency of one country can be converted into currency of another country is called exchange rate, e.g., $ 1 = ₹ 65 means to buy $ 1 of US, an Indian resident must pay ₹ 65.

  • A rise in the exchange rate for India means the value of Indian currency has declined in the international market.
  • A fall in the exchange rate for India means the value of Indian currency has increased in the international market.
  • If the exchange rate rises for India, then imports by India tends to decline and India’s exports tend to rise.


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