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Question : What is the term used to describe the rate at which a central bank buys or sells its own currency in the foreign exchange market?

Option 1: Spot exchange rate
 

Option 2: Nominal exchange rate
   

Option 3: Intervention exchange rate

 

Option 4: Forward exchange rate


Team Careers360 5th Jan, 2024
Answer (1)
Team Careers360 20th Jan, 2024

Correct Answer: Intervention exchange rate

 


Solution : The correct answer is c)  Intervention exchange rate

This rate is set by the central bank and is used as a tool to influence the value of the currency in the market. By buying or selling its own currency, the central bank can affect the supply and demand dynamics, and thus influence the exchange rate.

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