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      Question

      A firm receives an export payment in USD. If the rupee

      appreciates before conversion, what is the effect on the firmโ€™s income?
      A Increase in rupee value of receivable Correct Answer Incorrect Answer
      B Decrease in rupee realization Correct Answer Incorrect Answer
      C No impact on income Correct Answer Incorrect Answer
      D Additional interest benefit Correct Answer Incorrect Answer
      E Inflation adjustment Correct Answer Incorrect Answer

      Solution

      If the rupee appreciates (e.g., โ‚น83 โ†’ โ‚น81/USD), fewer rupees will be received for each dollar. Hence, rupee realization decreases, which may impact exporter revenue.

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