Economics · Economy
Consider the following statements regarding the exchange rate dynamics of the Indian Rupee (INR): Statement I: Periodic depreciation of the rupee against the US dollar is often driven by global macroeconomic factors, such as rising US interest rates and foreign capital outflows. Statement II: A widening trade deficit and elevated global commodity prices typically put downward pressure on the domestic currency's exchange value. Which one of the following is correct in respect of the above statements?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Both Statement I and Statement II are incorrect.
- 2Statement I is incorrect, but Statement II is correct.
- 3Both Statement I and Statement II are correct, and Statement II is a valid economic factor influencing Statement I.✓
- 4Statement I is correct, but Statement II is incorrect.
Correct answer
Both Statement I and Statement II are correct, and Statement II is a valid economic factor influencing Statement I.
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