Foreign Exchange, FDI & External Debt (Part

21. Baht is the currency of: [M.P.P.C.S. (Pre) 1990]

(a) Turkey
(b) Thailand
(c) Vietnam
(d) Iran

Correct Answer: (b) Thailand

Solution:Baht is the currency of Thailand. Turkiye's - Turkish Lira, Vietnam's-Dong, Iran's - Rial.

Recently, the Reserve Bank of India (RBI) liberalized FEMA regulations, 1999 to encourage use of Indian Rupee (Internationalization of Rupee) for settlement of cross border transactions.
Internationalization of Rupee refers to a process that involves increasing the use of the rupee in cross-border transactions.
It involves promoting the rupee for import and export trade and then other current account transactions, followed by its use in capital account transactions.

22. Currency of China is: [M.P.P.C.S. (Pre) 1990]

(a) Yuan
(b) Leera
(c) Yen
(d) Rupee

Correct Answer: (a) Yuan

Solution:Currency of China is Yuan (a unit of official currency Renminbi), while Lira (at present Euro) is the currency of Italy. Japan's currency is Yen and India's currency is Rupee.

Chinese money is referred to by two names: the Chinese yuan (CNY) and renminbi (RMB), which translates to "People's Currency." The distinction between CNY and RMB is subtle. RMB is the official currency of China. The yuan is the principal unit of account for that currency. Chinese currency defines the economy of one of the world's biggest superpowers. It's also central to one of the most debated issues involving China: its perceived mercantilist policy of
artificially undervaluing currency against the U.S. dollar. This is believed to give its exports an unfair price advantage.

23. Yuan is the currency of which country? [Chhattisgarh P.C.S. (Pre) 1999]

(a) Japan
(b) Korea
(c) China
(d) Bhutan

Correct Answer: (c) China

Solution:Currency of China is Yuan (a unit of official currency Renminbi), while Lira (at present Euro) is the currency of Italy. Japan's currency is Yen and India's currency is Rupee.

Chinese money is referred to by two names: the Chinese yuan (CNY) and renminbi (RMB), which translates to "People's Currency." The distinction between CNY and RMB is subtle. RMB is the official currency of China. The yuan is the principal unit of account for that currency. Chinese currency defines the economy of one of the world's biggest superpowers. It's also central to one of the most debated issues involving China: its perceived mercantilist policy of
artificially undervaluing currency against the U.S. dollar. This is believed to give its exports an unfair price advantage.

24. Dinar/New Dinar is not the currency of: [I.A.S. (Pre) 1999]

(a) Sudan
(b) Yugoslavia
(c) U.A.E.
(d) Tunisia

Correct Answer: (c) U.A.E.

Solution:Among the given countries, Dinar/New Dinar is not the currency of U.A.E. The currency of U.A.E. is Dirham.

The AED is the currency abbreviation for the United Arab Emirates dirham, the official currency of Dubai and other Emirates. It is often presented with the symbol Dhs or DH.
The United Arab Emirates dirham has been used since 1973, when it replaced several currencies, such as the Dubai riyal and the Qatar riyal.

25. 125. Match List I with List II and select the correct answer using the codes given below the lists: [I.A.S. (Pre) 1998]

List I	List II
A. Ringgit	1. Indonesia
B. Baht	2. South Korea
C. Rupiah	3. Thailand
D. Won	4. Malaysia

Codes:

Option	A	B	C	D
(a)	1	3	4	2
(b)	4	3	1	2
(c)	1	2	4	3
(d)	4	2	1	3

(a)
(b)
(c)
(d)

Correct Answer: (b)

Solution:The correctly matched lists are as follows:

Country	Currency
Malaysia	Ringgit
Thailand	Baht
Indonesia	Rupiah
South Korea	Won

26. Match List 1 (Country) with List 2 (Currency) on the basis of given codes: [Chhattisgarh P.C.S. (Pre) 2008]

List 1	List 2
A. Mexico	1. Yen
B. Austria	2. Peso
C. Japan	3. Riyal
D. Saudi Arab	4. Schilling

Codes:

Option	A	B	C	D
(a)	2	1	3	4
(b)	2	4	1	3
(c)	2	3	4	1
(d)	2	3	1	4

(a)
(b)
(c)
(d)

Correct Answer: (b)

Solution:The correctly matched lists are as follows:

List 1	List 2
A. Mexico	Peso
B. Austria	Schilling
C. Japan	Yen
D. Saudi Arab	Riyal

27. Which one of the following statements is correct with reference to FEMA in India? [I.A.S. (Pre) 2003]

(a) The Foreign Exchange Regulation Act (FERA) was replaced by Foreign Exchange Management Act (FEMA) in the year 2001.
(b) FERA was given a sunset clause of one year till 31 May, 2002 to enable Enforcement Directorate to complete the investigation of pending issues.
(c) Under FEMA, violation of foreign exchange rules has ceased to be a criminal offence.
(d) As per the new dispensation, Enforcement Directorate can arrest and prosecute the people for the violation of foreign exchange rules.

Correct Answer: (c) Under FEMA, violation of foreign exchange rules has ceased to be a criminal offence.

Solution:The Foreign Exchange Regulation Act (FERA), 1973 was replaced by the Foreign Exchange Management Act (FEMA), 1999 on June 1, 2000. Under FEMA, violation of foreign exchange rules has ceased to be a criminal offence. If there was a violation of FEMA rules, then it is considered as civil offence instead of criminal offence as under FERA Act. Apart from removing criminal prosecution for non-compliance of foreign exchange norms, FEMA also introduced a sunset clause of two years till 31 May, 2002 to enable Enforcement Directorate to complete the Investigation of pending issues. Hence, option (c) is the correct answer.

28. From which year the FEMA came into force? [M.P.P.C.S. (Pre) 2006]

(a) 2003
(b) 2002
(c) 2000
(d) 1999

Solution:The Foreign Exchange Regulation Act (FERA), 1973 was replaced by the Foreign Exchange Management Act (FEMA), 1999 on June 1, 2000. Under FEMA, violation of foreign exchange rules has ceased to be a criminal offence. If there was a violation of FEMA rules, then it is considered as civil offence instead of criminal offence as under FERA Act. Apart from removing criminal prosecution for non-compliance of foreign exchange norms, FEMA also introduced a sunset clause of two years till 31 May, 2002 to enable Enforcement Directorate to complete the Investigation of pending issues. Hence, option (c) is the correct answer.

29. The Government t of India has replaced FERA by: [U.P.P.C.S. (Mains) 2007]

(a) The Competition Act
(b) The FEMA
(c) The Monopolies Act
(d) The MRTP Act

Correct Answer: (b) The FEMA

Solution:The Foreign Exchange Regulation Act (FERA), 1973 was replaced by the Foreign Exchange Management Act (FEMA), 1999 on June 1, 2000. Under FEMA, violation of foreign exchange rules has ceased to be a criminal offence. If there was a violation of FEMA rules, then it is considered as civil offence instead of criminal offence as under FERA Act. Apart from removing criminal prosecution for non-compliance of foreign exchange norms, FEMA also introduced a sunset clause of two years till 31 May, 2002 to enable Enforcement Directorate to complete the Investigation of pending issues. Hence, option (c) is the correct answer.

30. FEMA (Foreign Exchange Management Act) was finally implemented in the year: [U.P.P.C.S.(Pre) 2013]

(a) 1991
(b) 1997
(c) 2002
(d) 2007

Solution:Foreign Exchange Management Act (FEMA), 1999 with the objective of facilitating external trade and payments and for promoting the orderly development and maintenance foreign exchange market in India, came into force on June 1, 2000 with a sunset clause of two years. It was finally fully implemented in the year 2002 after the period of sunset clause was over.

Objectives of FEMA

Regulation & Management of Foreign Exchange: FEMA governs all aspects of foreign exchange transactions in India, including:
Acquisition & Holding of foreign exchange.
Payment & Settlement of foreign exchange transactions.
Export & Import of currency.
Liberalizing Foreign Exchange Policies: Unlike FERA, which was restrictive and criminalized violations, FEMA is more transparent and promotes globalization.
Empowerment of RBI: The Reserve Bank of India (RBI) is the key authority under FEMA. The RBI can frame rules, issue guidelines, and regulate foreign exchange transactions.
Civil nature of offences: Violations under FEMA are civil offences (unlike FERA, where they were treated as criminal offences). Penalties and fines can be imposed for non-compliance.

Foreign Exchange, FDI & External Debt (Part – III)