With reference to currency exchange rate regimes, consider the following statements: 1. In a floating exchange rate regime, the value of a currency is determined by market forces without government intervention. 2. India follows a pure floating currency regime with no intervention from the Reserve Bank of India. 3. A managed exchange rate system blends features of both fixed and flexible exchange rate regimes. Which of the statements given above is/are correct? |ForumIAS

[A] 1 and 2 only

[B] 1 and 3 only

[C] 2 and 3 only

[D] 1, 2 and 3

Answer: B

Notes:

Explanation:

A floating exchange rate is determined by the market (demand and supply), with minimal or no government intervention.
India does not follow a pure floating regime; it follows a managed floating regime, where RBI occasionally intervenes to reduce volatility.
A managed exchange rate system is a hybrid of fixed and flexible regimes, involving occasional government interventions through policy tools or direct currency operations.

Source- TMH Indian Economy by Ramesh Singh

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