Which of the following is not the component of supply of foreign exchange?

An Indian child visiting USA for research purposes

The correct answer is Option (3) → An Indian child visiting USA for research purposes

An Indian child visiting USA for research purposes: When an Indian visits the USA for research purposes, it typically involves spending in foreign currency (USD in this case), which increases the demand for forex. This option represents a demand for foreign exchange, not a supply.

• Purchase of domestic goods and services by foreigners: This involves foreigners buying goods and services produced in the domestic country, which generates revenue in the domestic currency. When they pay in their currency, it increases the supply of foreign exchange (forex) in the domestic country.

• Remittances received by Indian family members: Remittances are funds sent by individuals working abroad back to their families in their home country. When remittances are received, they involve the conversion of foreign currency (forex) into the domestic currency (like Indian Rupees), thus they contribute to the supply of forex in the domestic economy.

• Assets of a home country bought by foreigners: This involves foreigners purchasing assets (such as real estate, businesses, stocks) in the home country using foreign currency. It leads to an inflow of foreign currency into the domestic country, thereby increasing the supply of forex.