Which of the following is source of demand for foreign exchange?
Answer & explanation
Correct answer: option 1
The correct answer is Option 1: Rita from Himachal Pradesh visiting Japan for office work
The demand for foreign exchange arises in order to make payment in foreign currency.
When, Rita visits Japan for office work all the expenses has to be done in Japanese Yen, thus demand for foreign currency increases.
Where as in all the other options the supply of the foreign currency is increasing. Kan-jung would exchange his foreign currency for rupees, reliance ltd. will bring foreign currency is exchange of their goods and investment by a Britain company in India will bring in foreign capital resulting in increase of supply of foreign currency.