Under a flexible exchange rate system, the rupee-dollar exchange rate in a year was as follows:
| Month | Exchange rate (Rs per dollar) |
|---|---|
| January | 80 |
| April | 83 |
| July | 81 |
| October | 85 |
In which period did the rupee appreciate against the dollar?
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → April to July
The rupee appreciates when we pay fewer rupees for one dollar. Only from April to July does the rate fall, from Rs 83 to Rs 81.
In every other period the rate rises, so the rupee depreciates:
January to April: 80 to 83
July to October: 81 to 85
January to October: 80 to 85
NCERT (2026-27): “Flexible Exchange Rate … Similarly, in a flexible exchange rate regime, when the price of domestic currency (rupees) in terms of foreign currency (dollars) increases, it is called Appreciation of the domestic currency (rupees) in terms of foreign currency (dollars). This means that the value of rupees relative to dollar has risen and we need to pay fewer rupees in exchange for one dollar.” |