Multiple choice

If the Reserve Bank of India wants to block/hinder capital outflows and contain currency depreciation, which of the following would be the most possible action?

  1. Purchase Government Bonds

  2. Decrease Interest Rates

  3. Increase Interest Rates

  4. Decrease Statutory Liquidity Ratio

  5. None of these

Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Yes, it is correct. If the Reserve Bank of India wants to block/hinder capital outflows and contain currency depreciation,  Increase interest rates would be the most possible action.