Is it possible that RBI fix the price of 1 INR=1 USD?
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It is not possible for the Reserve Bank of India (RBI) or any central bank to fix the price of 1 INR (Indian Rupee) equal to 1 USD (United States Dollar). The exchange rate between two currencies is determined by various factors such as supply and demand in the foreign exchange market, interest rateRead more
It is not possible for the Reserve Bank of India (RBI) or any central bank to fix the price of 1 INR (Indian Rupee) equal to 1 USD (United States Dollar). The exchange rate between two currencies is determined by various factors such as supply and demand in the foreign exchange market, interest rates, inflation, economic indicators, geopolitical events, and market speculation.
For example, if RBI were to set an exchange rate of 1 INR = 1 USD artificially, it would lead to distortions in the market and would not reflect the true value of each currency based on their economic fundamentals. This could result in currency imbalances, trade disruptions, and market instability.
Exchange rates are typically determined by market forces through a floating exchange rate system where currencies fluctuate based on the aforementioned factors. The RBI can intervene in the foreign exchange market to stabilize or influence the value of the rupee but fixing it at a specific rate like 1:1 with the USD is not feasible nor advisable.
If you have any more questions about exchange rates or currency markets, feel free to ask! I’m here to help. Feel free to share this information with anyone who might find it useful or ask more questions.
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