Assessing Forex Reserves
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Questions and Answers

Which parameter is NOT considered when assessing the adequacy of forex reserves?

  • Import cover
  • Current account surplus (correct)
  • Composition of capital inflows
  • Risk profile of capital inflows

    • How has India accumulated its forex reserves?

  • Through borrowed capital inflows (correct)
  • Through export earnings
  • Through surplus current account
  • Through foreign direct investment

    • What does the text suggest about the nature of India's forex reserves?

  • They are earned through export earnings
  • They are borrowed and may need to be returned (correct)
  • They are accumulated through foreign direct investment
  • They are accumulated through surplus current account

    • When did the capital flows reverse in India?

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