Current account deficit: who funds it?

current account deficit: who funds it?

An imbalance between India's chronic Current Account Deficit and inflows on the capital account disrupts the rupee dollar exchange rate. Watch this video to understand how external vulnerability forces RBI to intervene often and to use new ways to boost capital inflows.

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Current Account Deficit: Who funds it?

 An imbalance between India's chronic Current Account Deficit and inflows on the capital account disrupts the rupee dollar exchange rate. Watch this video to understand how external vulnerability forces RBI to intervene often and to use new ways to boost capital inflows.

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    1.India has historically had current account deficits because



  • It imports too much oil
  • It imports more than it exports
  • It exports more than it imports
  • 2.Continuous current account deficit creates high external vulnerability. A sustainable long term solution to manage the deficit is to



  • Remove oil subsidies
  • Encourage FII inflows
  • Increase export capability and volumes
  • 3.Despite persistent current account deficits, the exchange rate of the rupee has not depreciated continuously. This is mainly because of



  • Dollar inflows on the capital account
  • Regular RBI intervention
  • Forex market volatility
  • 4.Which of these events could trigger a depreciation in the exchange rate of the rupee?



  • Rise in Indian exports
  • Rise in FII inflows
  • Rise in international oil prices
  • 5.The surplus on services in recent years is mainly due to



  • Software exports
  • Oil exports
  • Agricultural exports
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