Question

What is the main objective of the reserves held by the RBI?

• A. To increase profits
• B. To ensure stability of the currency
• C. To fund government projects
• D. To invest in foreign markets.

Answer 1

Answer:

B. To ensure stability of the currency

1. The Reserve Bank of India (RBI) maintains reserves primarily to ensure currency stability by:

   • Managing exchange rate fluctuations

   • Maintaining adequate foreign exchange reserves

   • Controlling inflation

   • Protecting the value of the Indian Rupee