Question
Download Solution PDFWhich of the following terms are the components of forex reserves?
1. Foreign Currency Assets
2. Gold
3. Special Drawing Rights
4. The Reserve in the International Monetary Fund
Answer (Detailed Solution Below)
Detailed Solution
Download Solution PDFThe Correct answer is Option 4.
Key Points
- Foreign Currency Assets (1): Foreign currency assets constitute a significant portion of forex reserves, including currencies held in different denominations.
- Gold (2): Gold is considered a vital component of forex reserves as it acts as a store of value and is part of a country's reserve assets.
- Special Drawing Rights (3): Special Drawing Rights (SDRs) are an international reserve asset created by the International Monetary Fund (IMF) and are included in the forex reserves.
- The Reserve in the International Monetary Fund (4): The reserves held in the IMF, often referred to as the quota subscription, are also considered part of a country's forex reserves. Thus, the correct answer is Option 4.
Last updated on May 16, 2025
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