Q. Which one of the following scenarios is likely to lead to an appreciation of the Indian rupee against the US dollar?

[A] An increase in India’s import expenses.

[B] Higher interest rates in the United States compared to India.

[C] An increase in foreign investments into India.

[D] A decrease in remittances from abroad to India.

Answer: C
Notes:

Explanation – An increase in foreign investments into India increases the demand for the Indian rupee, as foreign investors need to convert their currency into rupees to invest in Indian assets. This increased demand for the rupee can lead to its appreciation against the US dollar.

Source: AIR

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