Economics · Foreign Exchange Market
Under a managed float exchange rate system, a central bank like the RBI intervenes in the Foreign Exchange Market primarily to:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1decrease the overall broad money supply
- 2permanently increase aggregate domestic demand
- 3directly control domestic retail inflation
- 4smooth out short-run fluctuations in exchange rates✓
Correct answer
smooth out short-run fluctuations in exchange rates
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