Macro

Balance of Payments

Medium

Why official reserve transactions are not equal to zero under managed floating exchange rate system?

Central banks do intervene in the foreign exchange market.

Market forces determine the rate in the foreign exchange market.

Central banks do not intervene in the foreign exchange market.

Repo rate and reverse repo rate cancel each other.

✅ Correct Option: 1

Under managed floating, the exchange rate is broadly market determined, but central banks buy and sell foreign exchange to moderate fluctuations. This intervention changes official reserve holdings, so official reserve transactions are not zero.

2026: 23 May Shift 1

Which one of the following statements is correct about the balance of payment (BOP)?

2026: 11 May Shift 1

Which of the following is not a component of current account in balance of payment?

2025: 13 May Shift 2

The place where currencies are traded is known as .........

2025: 28 May Shift 1

Trade deficits occur when

2022: 19 July Shift 2

The likely impact of a depreciation of the domestic currencies of the South East Asian Countries on exports to the US would be :

2026: 21 May Shift 2

Calculate the current account balance from the information given below:

Exports = 400 crores

Imports = 750 crores

Net Invisibles

Income = - 60 crores

Transfer = 90 crores

Why official reserve transactions are not equal to zero under managed floating exchange rate system?

Solution

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