In 1991, the rupee was devalued against foreign currencies. What did this lead to?
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Increase in the inflow of foreign exchange
In 1991, the rupee was devalued as an immediate step to solve the balance of payments crisis. This led to an increase in the inflow of foreign exchange.
NCERT (2026-27): “Foreign Exchange Reforms: The first important reform in the external sector was made in the foreign exchange market. In 1991, as an immediate measure to resolve the balance of payments crisis, the rupee was devalued against foreign currencies. This led to an increase in the inflow of foreign exchange. It also set the tone to free the determination of rupee value in the foreign exchange market from government control. Now, more often than not, markets determine exchange rates based on the demand and supply of foreign exchange.” |