General Awareness · Banking Financial Awareness

Currencies and Exchange Rates

1,480 Questions

Knowledge of global currencies and exchange rates is vital for general awareness sections in banking and civil service exams. Topics include identifying the official currencies of various countries and understanding digital currency types. Use this collection to quickly memorize international currency symbols.

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Currencies and Exchange Rates Questions

Multiple choice business economics and quantitative methods balance of payments exchange rate balance of payments and exchange rate balance of trade and balance of payments

For which of the following purposes Indian currency is fully convertible? Select correct code :
1. Repatriation of remittances
2. Interest payments of foreign loans
3. Direct foreign investment
4. Indirect foreign investment
5. Trade 

  1. 1,3 and 5

  2. 1,2,4 and 5

  3. 3,4 and 5

  4. 2,4 and 5
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Rupee is fully convertible in the cases interest payment, remittances, grants and indirect foreign investment (though, it belongs to the capital account).

Multiple choice business economics and quantitative methods balance of payments exchange rate balance of payments and exchange rate balance of trade and balance of payments

Select the correct one/ones in case of a volatility in the exchange rate of the rupee-using the code given below:
1. With depreciation in it, India's export earning increase.
2. Oil marketing companies of India benefit out of appreciation in it.

  1. Only 1

  2. Only 2

  3. 1 and 2 both

  4. Neither 1 nor 2
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Depreciation makes a country's exports become cheaper in the international market (the reason exports increase and get benefit). On the other hand with an appreciation in it the oil marketing companies of India are able to import cheaper crude oil.

Multiple choice business economics and quantitative methods balance of payments exchange rate balance of payments and exchange rate balance of trade and balance of payments

The exchange rate of currency is maintained at the same level in all the foreign exchange markets through _____________.

  1. exchange arbitrage

  2. interest arbitage

  3. hedging

  4. speculation
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Arbitrage refers to the simultaneous buying or selling of foreign currencies with the intention of making profits from the differences between the exchange rates prevailing in different markets at the same time. The one who conducts arbitrage trade is known as an arbitrageur. Exchange arbitrage leads to change in demand and supply of currencies, so as to bring in a balance in exchange rates in all the markets.

For example, if \$1 = Rs.10 in India and \$1 = Rs.12 in Nepal. The arbitrageur in this case will buy dollars in India at Rs. 10 and sell it for Rs. 12 in Nepal. Thus, the demand rise in India will lead to rise in exchange rate in India, while, increased supply in Nepal will lead to fall in exchange rate in that market, leading to elimination of difference in exchange rates between both the markets.

Multiple choice business economics and quantitative methods balance of payments exchange rate balance of payments and exchange rate balance of trade and balance of payments

A change from USD 3 = GBP 1 to USD 2 = GBP 1 represents ___________.

  1. a depreciation of the dollar

  2. an appreciation of the dollar

  3. an appreciation of the pound

  4. None of the above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

As now less dollars have to be exchanged to buy one pound, the value of the dollar against the pound has increased and its cheaper to buy pounds, this is know as an appreciation of the currency (in this case dollar). 

Multiple choice business economics and quantitative methods balance of payments exchange rate balance of payments and exchange rate balance of trade and balance of payments

Which country follows a fixed exchange rate system?

  1. India

  2. USA

  3. UK

  4. Cuba
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

In a fixed rate system, the price of the domestic currency in international markets is purely determined by the central bank of the country. It is not allowed to appreciate and depreciate as per the market conditions, the central bank will intervene using forex reserves and hold the exchange rate at the pegged amount  The Banco Central De Cuba does intervene in the forex market for the Cuban peso and it is classified as a fixed currency. 

Multiple choice business economics and quantitative methods balance of payments exchange rate balance of payments and exchange rate balance of trade and balance of payments

Which country follows an flexible exchange rate system?

  1. Cuba

  2. Dijibouti

  3. Eritrea

  4. USA
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

In a flexible rate system, the price of the domestic currency in international markets is purely determined by the market forces of supply and demand. It is allowed to appreciate and depreciate as per the market conditions, without intervention by the central bank. The Federal Reserve does not intervene in the forex market for the US dollar and it is classified as a freely floating currency.  

Multiple choice business economics and quantitative methods balance of payments exchange rate balance of payments and exchange rate balance of trade and balance of payments

What is Forex?

  1. It is buying of foreign currency.

  2. It is selling of foreign currency.

  3. It is buying of one currency and selling of another currency.

  4. It is simultaneous buying of one currency and selling of another currency.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Forex (Foreign Exchange) market involves the simultaneous buying of one currency and selling of another to facilitate international trade and investment.

Multiple choice business economics and quantitative methods balance of payments exchange rate balance of payments and exchange rate balance of trade and balance of payments

What is foreign exchange rate?

  1. The price of one currency in term of another

  2. Price of one quantity in terms of another

  3. Price of one currency in terms of another economies price

  4. Price of one economies price in terms of another economies currency
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The foreign exchange rate of a currency is the price of a currency in terms of another, as it refers to the rate at which the currencies of different countries are traded or exchanged. The exchange rate can be expressed in either of the two ways, (i) the number of units of the domestic currency that exchanges for one unit of the foreign currency (eg. INR 68.54 for USD 1 ) or (ii) the number of units of the foreign currency that exchange for one unit of the domestic currency. (USD 0.015 to INR 1)

Multiple choice business economics and quantitative methods balance of payments exchange rate balance of payments and exchange rate balance of trade and balance of payments

Depreciation of currency means a  ________.

  1. fall in exchange value of a country by market forces

  2. reduction in external value/exchange value of currency by the Government

  3. reduction in external value / exchange value due to wear and tear

  4. all the three
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

When a country follows a floating exchange rate regime, it is possible for the currency to fall in value due to a fall in demand for the currency that can be caused for a variety of reasons like decline of demand for the country's exports or attractive investment opportunities abroad.

Multiple choice book keeping and accountancy accounting equation and business transactions introduction to final accounts meaning, objectives and importance of final accounts meaning, objectives, importance and preparation of final accounts

A group of European countries have formed a union and created a common currency known as _________.

  1. the EU currency

  2. the European Union

  3. the EMU

  4. the Euro
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The European Union countries that adopted a common currency use the Euro.

Multiple choice organisation of commerce and management economics of development and planning fundamental of economic development economics of development economic mechanism

Convertibility of rupee means _________.

  1. determination its own exchange rate in international market

  2. conversion of rupee into any foreign currency

  3. transfer of funds in international market

  4. none of these
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Convertibility of rupees refers to the ability of rupees to be converted into any foreign currency backing with the exchange rate that prevails at the time of conversion. 

Multiple choice history economic system and economic policies american dominance, neo-imperialism and new economic policy insights on lpg changing economic policies

Which one is called Bretton-Woods Twin?

  1. IBRD and IDA

  2. IMF and IFC

  3. IMF and IBRD

  4. IDA and IFC
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The IMF and the IBRD (the primary institution of the World Bank Group) were both established at the 1944 Bretton Woods Conference. They are collectively referred to as the Bretton Woods Twins.

Multiple choice history economic system and economic policies american dominance, neo-imperialism and new economic policy insights on lpg changing economic policies

SDR is the currency of IMF, which is also called as __________.

  1. white gold

  2. book keeping entry only

  3. paper gold

  4. yellow metal
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

SDR is the currency of IMF. SDR stands for Special Drawing Rights. This refers to supplementary foreign-exchange reserve. It is also known as paper gold. It is maintained by International Monetary Fund.

Multiple choice commercial studies money loans from banks and financial institutions introduction to money - barter system owned fund and borrowed fund

Select the correct statement/statements regarding 'numeraire' from the given list using the code given below:
1. It is a monetary unit for denominating international exchanges on a common basis.
2. Today the Special Drawing Rights (SDRs) of the IMF is accepted as the standard numeraire in the world.

  1. Only $1$
  2. Only $2$
  3. Both $1$ and $2$
  4. Neither $1$ nor $2$
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The US dollar is presently being used as the numeraire for all international transactions and calculating the foreign reserves of the economies (it means that an economy may be maintaining its foreign currency. Reserves in many world currencies as per its use show its total volume in the US dollars). Similarly, all transactions of the IMF are also shown in it (including its SDRs).