RAS question
Effective exchange rate is published by:
Correct answer: (A) RBI.
The Reserve Bank of India publishes the rupee's nominal effective exchange rate and real effective exchange rate indices.
Explanation
Effective exchange rate refers to the RBI's NEER and REER indices for the Indian rupee. The Reserve Bank of India Bulletin publishes "Indices of Nominal Effective Exchange Rate (NEER) and Real Effective Exchange Rate (REER) of the Indian Rupee" and reports both 40-currency and 6-currency baskets. The Reserve Bank of India is the publishing authority for these indices. These are not simple rupee-dollar rates: they are effective exchange-rate indices built around currency baskets, with trade-weighted figures used to judge the rupee's external competitiveness. REER adjusts the picture in real terms, while NEER captures the nominal effective movement.
Why the other options are wrong
- (B) The IMF is not the publisher of India's NEER and REER indices; the Reserve Bank of India Bulletin is the publication for these effective exchange-rate series.
- (C) SEBI regulates securities markets and does not publish India's effective exchange-rate indices.
- (D) The Reserve Bank of India Bulletin publishes NEER and REER of the Indian rupee; the Ministry of Commerce does not publish these RBI effective exchange-rate indices.
Concept
External-sector indicators in the Indian Economy syllabus include exchange-rate measures. RAS repeats this area because NEER and REER link exchange rates with external competitiveness, a standard macroeconomic theme.