Q. Which among the following is the best definition of ” Rupee Convertibility” ?
Answer: permission of the conversion of Rupee to other currencies and vice versa
Notes: Rupee Convertibility refers to the ability to exchange the Indian Rupee for other currencies and vice versa without restrictions. This concept is crucial for facilitating international trade and investment. India adopted partial convertibility in 1991, allowing for the conversion of Rupees to foreign currencies for current account transactions, while capital account transactions remain regulated. This system enhances liquidity and stability in the foreign exchange market.