A) being able to convert rupee notes into gold
B) allowing the value of rupee to be fixed by market forces
C) freely permitting the conversion of rupee to other currencies and wee- versa
D) developing an international market for currencies in India
Correct Answer: C
Solution :
Exp. [c] Convertibility of a currency means, currency of a country can be freely converted into foreign exchange at market determined rate of exchange that is, exchange rate as determined by demand for and supply of a currency. Convertibility of rupee means that those who have foreign exchange (e.g., US Dollars, Pound Sterlings etc.) can get them converted into rupees and vice-versa at the market determined rate of exchange.
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