Which of the following are components of India rsquo s Foreign Exchange Reserves 1 Special Drawing R...........

Economic Affairs Money Supply and Monetary Policy

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Which of the following are components of India’s Foreign Exchange Reserves?

1.Special Drawing Rights

2. Foreign Currency Assets

3. Reserve Tranche Position

4. Gold

Select the correct answer using the code given below:

2 only

2 and 4 only

1, 2 and 4 only

1, 2, 3 and 4

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Explanation:

All 1, 2, 3 and 4 are correct.

Reserve Bank of India Act and the Foreign Exchange Management Act, 1999 set the legal provisions for governing the foreign exchange reserves. Reserve Bank of India accumulates foreign currency reserves by purchasing from authorized dealers in open market operations. Foreign exchange reserves of India act as a cushion against rupee volatility once global interest rates start rising.

The Foreign exchange reserves of India consists of below four categories;