Question : The Indian Government launched Incredible India campaign to promote tourism in India? How it will impact the exchange rate?
Option 1: Appreciation of domestic currency
Option 2: Outflow of foreign exchange
Option 3: Depreciation of domestic currency
Option 4: None
Correct Answer:
Appreciation of domestic currency
Solution : The correct answer is (a) Appreciation of domestic currency
The launch of the Incredible India campaign to promote tourism in India can potentially have an impact on the exchange rate. Tourists typically need to exchange their home currency for the local currency (Indian Rupee), which increases the demand for the Rupee. This increased demand can potentially lead to the appreciation of the Indian Rupee.
It's important to note that the impact on the exchange rate will depend on various other factors such as overall economic conditions, government policies, capital flows, and market dynamics. Therefore, while the Incredible India campaign can influence the exchange rate, its specific impact will depend on the broader context of the economy and external factors.
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