What is the role of the RBI in managing the foreign exchange market?

What is the role of the RBI in managing the foreign exchange market?

Step 1: Understand that the RBI stands for the Reserve Bank of India, which is the central bank of India.
Step 2: Know that the foreign exchange market is where currencies are bought and sold.
Step 3: Recognize that the exchange rate is the price of one currency in terms of another currency.
Step 4: Learn that the RBI monitors the exchange rate to prevent it from fluctuating too much.
Step 5: Understand that the RBI intervenes by buying or selling currencies to stabilize the exchange rate.
Step 6: Realize that the RBI aims to create orderly conditions in the foreign exchange market, which means keeping it predictable and stable.

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