Which of the following functions of a bank make it eligible to exchange Indian currency with any other currency?

Bill discounting

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Letter of credit and bank guarantee

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Conducting government transactions

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Conducting foreign exchange transactions

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Solution

The correct option is D Conducting foreign exchange transactions
A bank conducts foreign exchange transactions. This means that if any individual or government wants to exchange Indian currency with any other currency, for example, dollars, then the banks will facilitate such transactions.

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Q18. Consider the following statements:

1. In the floating exchange rates, currency values are determined by central bank.

2. Currency depreciation is usually done by a nation’s central bank.

Which of the above statements are correct?

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