Q. Full convertibility of a rupee means ?
A) Repayment of loans in terms of rupees
B) Determination of rate of exchange between rupee and foreign currencies freely by the market forces of demand and supply
C) Purchase of foreign exchange for rupees freely
D) Payment for imports in terms of rupees
✔ Correct Answer: Determination of rate of exchange between rupee and foreign currencies freely by the market forces of demand and supply
Exam Insight
Full convertibility of a rupee means that the currency can be exchanged freely for foreign currencies without any restrictions on current and capital account transactions.