Which one of the following is not the most likely measure the Government/RBI takes to stop the slide of Indian rupee?
[amp_mcq option1=”Curbing imports of non-essential goods and promoting exports” option2=”Encouraging Indian borrowers to issue rupee denominated Masala Bonds” option3=”Easing conditions relating to external commercial borrowing” option4=”Following an expansionary monetary policy” correct=”option4″]
This question was previously asked in
UPSC IAS – 2019
A) Curbing imports (reduces demand for foreign currency) and promoting exports (increases supply of foreign currency) improves the trade balance and supports the rupee.
B) Encouraging Indian borrowers to issue rupee-denominated Masala Bonds abroad brings foreign currency into India as foreign investors buy these bonds, increasing demand for the rupee.
C) Easing conditions for External Commercial Borrowing (ECB) encourages Indian entities to borrow in foreign currency from abroad, bringing foreign currency into India and increasing its supply relative to the rupee.
Therefore, an expansionary monetary policy is the least likely measure to be taken to stop a currency slide.