Q. With reference to currency and asset valuation, consider the following statements:
1.Revaluation refers to an official increase in the value of a domestic currency under a fixed exchange rate regime.
2.Appreciation of a domestic currency in the forex market can occur only under a managed exchange rate system.
Which of the statements given above is/are correct?
Answer: A
Notes:
Explanation:
- Revaluation is the official increase in a domestic currency’s exchange rate by the government — it typically occurs under a fixed exchange rate regime.
- Appreciation is a market-driven increase in the value of a domestic currency under a floating exchange rate regime, not necessarily under a managed one. Managed regimes may allow appreciation, but it’s not a necessity.
Source- TMH Indian Economy by Ramesh Singh
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