|Consider the following regarding the Asian Clearing Union:|
|1. It was constituted to eliminate the difficulty of payments for trade in local currencies so as to solve the scarcity problem of foreign exchange.|
|2. The headquarters of ACU is in Tehran (Iran).|
|Which of these statements is/are correct?|
A) Only 1
B) Only 2
C) Both 1 and 2
D) neither 1 nor 2
Correct Answer: C
Solution :[c] Asian Clearing Union (ACU) is a payment arrangement whereby the participants settle payments for intra-regional transactions among the participating central banks on a net multilateral basis. The main objectives of the clearing union are to facilitate payments among member countries for eligible transactions, thereby economizing on the use of foreign exchange reserves and transfer costs, as well as promoting trade and banking relations among the participating countries.
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