{"id":85518,"date":"2025-06-01T03:19:35","date_gmt":"2025-06-01T03:19:35","guid":{"rendered":"https:\/\/exam.pscnotes.com\/mcq\/?p=85518"},"modified":"2025-06-01T03:19:35","modified_gmt":"2025-06-01T03:19:35","slug":"which-of-the-following-statements-is-are-correct-most-of-indias-re","status":"publish","type":"post","link":"https:\/\/exam.pscnotes.com\/mcq\/which-of-the-following-statements-is-are-correct-most-of-indias-re\/","title":{"rendered":"Which of the following statements is\/are correct?\n  Most of India&#8217;s re"},"content":{"rendered":"<p>Which of the following statements is\/are correct?<\/p>\n<ul>\n<li>Most of India&#8217;s reserves is held in the form of foreign currency.<\/li>\n<li>There is no cost of holding foreign currency as reserves by a nation.<\/li>\n<\/ul>\n<p>Select the correct answer using the code given below.<\/p>\n<p>[amp_mcq option1=&#8221;1 only&#8221; option2=&#8221;2 only&#8221; option3=&#8221;Both 1 and 2&#8243; option4=&#8221;Neither 1 nor 2&#8243; correct=&#8221;option1&#8243;]<\/p>\n<div class=\"psc-box-pyq-exam-year-detail\">\n<div class=\"pyq-exam\">\n<div class=\"psc-heading\">This question was previously asked in<\/div>\n<div class=\"psc-title line-ellipsis\">UPSC CDS-1 &#8211; 2024<\/div>\n<\/div>\n<div class=\"pyq-exam-psc-buttons\"><a href=\"\/pyq\/pyq-upsc-cds-1-2024.pdf\" target=\"_blank\" class=\"psc-pdf-button\" rel=\"noopener\">Download PDF<\/a><a href=\"\/pyq-upsc-cds-1-2024\" target=\"_blank\" class=\"psc-attempt-button\" rel=\"noopener\">Attempt Online<\/a><\/div>\n<\/div>\n<section id=\"pyq-correct-answer\">\nA) 1 only<br \/>\n<\/section>\n<section id=\"pyq-key-points\">\n&#8211; Statement 1 is correct. India&#8217;s foreign exchange reserves are composed of Foreign Currency Assets (FCA), Gold, Special Drawing Rights (SDRs), and Reserve Tranche Position (RTP) in the IMF. Foreign Currency Assets, held in major currencies, consistently form the largest component, typically accounting for over 90% of the total reserves.<br \/>\n&#8211; Statement 2 is incorrect. Holding foreign currency reserves incurs costs. These include the opportunity cost (the return that could have been earned if the funds were invested domestically or in higher-yield assets instead of low-yield reserves), potential losses due to exchange rate fluctuations (if the reserve currency depreciates), and administrative costs of managing the reserves.<br \/>\n<\/section>\n<section id=\"pyq-additional-information\">\n&#8211; Foreign exchange reserves are crucial for managing exchange rate volatility, providing confidence to markets, and meeting balance of payments needs. However, maintaining excessively high levels can be costly due to the reasons mentioned in statement 2.<br \/>\n<\/section>\n","protected":false},"excerpt":{"rendered":"<p>Which of the following statements is\/are correct? Most of India&#8217;s reserves is held in the form of foreign currency. There is no cost of holding foreign currency as reserves by a nation. Select the correct answer using the code given below. [amp_mcq option1=&#8221;1 only&#8221; option2=&#8221;2 only&#8221; option3=&#8221;Both 1 and 2&#8243; option4=&#8221;Neither 1 nor 2&#8243; correct=&#8221;option1&#8243;] &#8230; <\/p>\n<p class=\"read-more-container\"><a title=\"Which of the following statements is\/are correct?\n  Most of India&#8217;s re\" class=\"read-more button\" href=\"https:\/\/exam.pscnotes.com\/mcq\/which-of-the-following-statements-is-are-correct-most-of-indias-re\/#more-85518\">Detailed Solution<span class=\"screen-reader-text\">Which of the following statements is\/are correct?<br \/>\n  Most of India&#8217;s re<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1087],"tags":[1103,1226],"class_list":["post-85518","post","type-post","status-publish","format-standard","hentry","category-upsc-cds-1","tag-1103","tag-external-sector-of-economy","no-featured-image-padding"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v22.2 (Yoast SEO v23.3) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Which of the following statements is\/are correct?  Most of India&#039;s re<\/title>\n<meta name=\"description\" content=\"A) 1 only - Statement 1 is correct. India&#039;s foreign exchange reserves are composed of Foreign Currency Assets (FCA), Gold, Special Drawing Rights (SDRs), and Reserve Tranche Position (RTP) in the IMF. Foreign Currency Assets, held in major currencies, consistently form the largest component, typically accounting for over 90% of the total reserves. - Statement 2 is incorrect. Holding foreign currency reserves incurs costs. These include the opportunity cost (the return that could have been earned if the funds were invested domestically or in higher-yield assets instead of low-yield reserves), potential losses due to exchange rate fluctuations (if the reserve currency depreciates), and administrative costs of managing the reserves.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/exam.pscnotes.com\/mcq\/which-of-the-following-statements-is-are-correct-most-of-indias-re\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Which of the following statements is\/are correct?  Most of India&#039;s re\" \/>\n<meta property=\"og:description\" content=\"A) 1 only - Statement 1 is correct. India&#039;s foreign exchange reserves are composed of Foreign Currency Assets (FCA), Gold, Special Drawing Rights (SDRs), and Reserve Tranche Position (RTP) in the IMF. Foreign Currency Assets, held in major currencies, consistently form the largest component, typically accounting for over 90% of the total reserves. - Statement 2 is incorrect. Holding foreign currency reserves incurs costs. These include the opportunity cost (the return that could have been earned if the funds were invested domestically or in higher-yield assets instead of low-yield reserves), potential losses due to exchange rate fluctuations (if the reserve currency depreciates), and administrative costs of managing the reserves.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/exam.pscnotes.com\/mcq\/which-of-the-following-statements-is-are-correct-most-of-indias-re\/\" \/>\n<meta property=\"og:site_name\" content=\"MCQ and Quiz for Exams\" \/>\n<meta property=\"article:published_time\" content=\"2025-06-01T03:19:35+00:00\" \/>\n<meta name=\"author\" content=\"rawan239\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"rawan239\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"1 minute\" \/>\n<!-- \/ Yoast SEO Premium plugin. -->","yoast_head_json":{"title":"Which of the following statements is\/are correct?  Most of India's re","description":"A) 1 only - Statement 1 is correct. India's foreign exchange reserves are composed of Foreign Currency Assets (FCA), Gold, Special Drawing Rights (SDRs), and Reserve Tranche Position (RTP) in the IMF. Foreign Currency Assets, held in major currencies, consistently form the largest component, typically accounting for over 90% of the total reserves. - Statement 2 is incorrect. Holding foreign currency reserves incurs costs. These include the opportunity cost (the return that could have been earned if the funds were invested domestically or in higher-yield assets instead of low-yield reserves), potential losses due to exchange rate fluctuations (if the reserve currency depreciates), and administrative costs of managing the reserves.","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/exam.pscnotes.com\/mcq\/which-of-the-following-statements-is-are-correct-most-of-indias-re\/","og_locale":"en_US","og_type":"article","og_title":"Which of the following statements is\/are correct?  Most of India's re","og_description":"A) 1 only - Statement 1 is correct. India's foreign exchange reserves are composed of Foreign Currency Assets (FCA), Gold, Special Drawing Rights (SDRs), and Reserve Tranche Position (RTP) in the IMF. Foreign Currency Assets, held in major currencies, consistently form the largest component, typically accounting for over 90% of the total reserves. - Statement 2 is incorrect. Holding foreign currency reserves incurs costs. These include the opportunity cost (the return that could have been earned if the funds were invested domestically or in higher-yield assets instead of low-yield reserves), potential losses due to exchange rate fluctuations (if the reserve currency depreciates), and administrative costs of managing the reserves.","og_url":"https:\/\/exam.pscnotes.com\/mcq\/which-of-the-following-statements-is-are-correct-most-of-indias-re\/","og_site_name":"MCQ and Quiz for Exams","article_published_time":"2025-06-01T03:19:35+00:00","author":"rawan239","twitter_card":"summary_large_image","twitter_misc":{"Written by":"rawan239","Est. reading time":"1 minute"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/exam.pscnotes.com\/mcq\/which-of-the-following-statements-is-are-correct-most-of-indias-re\/","url":"https:\/\/exam.pscnotes.com\/mcq\/which-of-the-following-statements-is-are-correct-most-of-indias-re\/","name":"Which of the following statements is\/are correct? Most of India's re","isPartOf":{"@id":"https:\/\/exam.pscnotes.com\/mcq\/#website"},"datePublished":"2025-06-01T03:19:35+00:00","dateModified":"2025-06-01T03:19:35+00:00","author":{"@id":"https:\/\/exam.pscnotes.com\/mcq\/#\/schema\/person\/5807dafeb27d2ec82344d6cbd6c3d209"},"description":"A) 1 only - Statement 1 is correct. India's foreign exchange reserves are composed of Foreign Currency Assets (FCA), Gold, Special Drawing Rights (SDRs), and Reserve Tranche Position (RTP) in the IMF. Foreign Currency Assets, held in major currencies, consistently form the largest component, typically accounting for over 90% of the total reserves. - Statement 2 is incorrect. Holding foreign currency reserves incurs costs. These include the opportunity cost (the return that could have been earned if the funds were invested domestically or in higher-yield assets instead of low-yield reserves), potential losses due to exchange rate fluctuations (if the reserve currency depreciates), and administrative costs of managing the reserves.","breadcrumb":{"@id":"https:\/\/exam.pscnotes.com\/mcq\/which-of-the-following-statements-is-are-correct-most-of-indias-re\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/exam.pscnotes.com\/mcq\/which-of-the-following-statements-is-are-correct-most-of-indias-re\/"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/exam.pscnotes.com\/mcq\/which-of-the-following-statements-is-are-correct-most-of-indias-re\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/exam.pscnotes.com\/mcq\/"},{"@type":"ListItem","position":2,"name":"UPSC CDS-1","item":"https:\/\/exam.pscnotes.com\/mcq\/category\/upsc-cds-1\/"},{"@type":"ListItem","position":3,"name":"Which of the following statements is\/are correct? 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