Question
Which of the following is not the most likely measure the Government/ RBI takes to stop the slide of Indian rupee?
(a) Curbing imports of non-essential goods and promoting exports
(b) Encouraging India borrowers to issue rupee denominated Masala Bonds
(c) Easing conditions relating to external commercial borrowing
(d) Following an expansionary monetary policy
Answer:
D
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Explanation:
When the value of the Indian rupee is declining, the Government/RBI typically takes various measures to stabilize or strengthen it. Let's analyze the other options:
(a) Curbing imports of non-essential goods and promoting exports: This measure aims to reduce the trade deficit by limiting the inflow of non-essential goods and boosting exports, which can help stabilize the currency.
(b) Encouraging Indian borrowers to issue rupee-denominated Masala Bonds: This measure promotes foreign investment in Indian rupee-denominated bonds, which can increase the demand for the rupee and strengthen its value.
(c) Easing conditions relating to external commercial borrowing: This measure involves relaxing restrictions on borrowing from foreign sources, which can bring in foreign currency inflows and support the rupee.
On the other hand, an expansionary monetary policy (option d) involves increasing the money supply and lowering interest rates to stimulate economic growth. While this policy may have various objectives, stabilizing or strengthening the currency is not its primary focus. Therefore, it is not the most likely measure taken specifically to stop the slide of the Indian rupee.