Economics • Banking & FinanceEasy
Which of the following best defines 'Open Market Operations (OMOs)' conducted by the Reserve Bank of India?
A. The buying and selling of government securities in the open market to regulate rupee liquidity in the economy.✓ Correct Answer
B. The direct fixation of interest rates on retail savings deposits across all scheduled banks.
C. The auctioning of foreign exchange reserves to stabilize the rupee-dollar exchange rate.
D. The issuance of new currency notes to replace soiled and mutilated currency.
💡 Solution & Explanation
Open Market Operations involve the direct purchase and sale of government securities by the central bank to regulate rupee liquidity conditions in the commercial banking system. They are distinct from direct interest rate fixations or foreign exchange interventions conducted by monetary authorities.
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