Question : What do you mean by Parity value of currency
Option 1: Value of currency fixed in terms of another currency
Option 2: Value of currency fixed in terms of gold
Option 3: Value of currency in terms of USD
Option 4: None
Correct Answer:
Value of currency fixed in terms of another currency
Solution : The correct answer is (a) Value of a currency fixed in terms of another currency
It represents the exchange rate at which one currency can be exchanged for another currency based on a predetermined fixed rate. In a fixed exchange rate system, the parity value is determined by the government or central bank and is usually maintained through interventions in the foreign exchange market. The fixed exchange rate ensures stability in currency values and facilitates international trade and financial transactions.
