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    Question

    Why is the rupee and other currencies facing a pressure

    lately? Read the passage and answer the questions that follow. The rupee is yet again facing renewed pressure, along with major peers, as the dollar continues to strengthen in the wake of the Federal Reserve’s latest jumbo 75 basis points interest rate increase and the U.S. central bank’s unequivocal message that it remains squarely focused on taming inflation. The Indian currency weakened past the 81-mark against the dollar for the first time ever in Friday’s intraday trade, before ending the week at a new record closing low. The rupee’s slide was softened by the Reserve Bank of India’s intervention to smoothen volatility; the cumulative impact of such interventions over the 12 months through September 16 have shrunk the RBI’s war chest of foreign exchange reserves by almost $94 billion to $545.65 billion. The fact that the rupee is not alone in depreciating against the dollar can be of little comfort to Indian companies reliant on imports of raw materials or services for the smooth functioning of their businesses.
    A This is because of the rise in the rate of oil, and increase in the value of currencies of countries of the Middle East. Correct Answer Incorrect Answer
    B This is because of RBI’s intervention and its intention to increase the foreign exchange reserves in the country. Correct Answer Incorrect Answer
    C This is because of the rise in the value of dollar owing to the latest Russia- Ukraine war. Correct Answer Incorrect Answer
    D This is because of the central bank of USA has pledged to curtail inflation and the interest rate increase of the Federal Reserve of USA. Correct Answer Incorrect Answer
    E None of these Correct Answer Incorrect Answer

    Solution

    In the passage, it is stated that “as the dollar continues to strengthen in the wake of the Federal Reserve’s latest jumbo 75 basis points interest rate increase and the U.S. central bank’s unequivocal message that it remains squarely focused on taming inflation…”

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