Capital Account Convertibility A Boon Or A Bane Economics Essay
7/30/2015
Capital Account Convertibility A Boon Or A Bane Economics Essay
Capital Account Convertibility A Boon
Or A Bane Economics Essay
Currency Convertibility means ease with which a particular currency or domestic currency can be converted into any other international currency and vice versa. Based on their convertibility currencies can be categorized into three groups namely:
Non Convertible currencies are those which cannot be converted into other internationally accepted currencies and vice versa i.e. countries of such currencies do not participate in FOREX
Markets.
Partially Convertible currencies are those which can be traded in the market with some restrictions from central bank of the country i.e. they can't be freely traded.
Fully Convertible currencies are those which can be freely traded without any restrictions from the central bank of the country.
Currency convertibility can be talked about in terms of two specific things which are Current
Account Convertibility which refers to freedom in conversion in respect of payments and transfers of current international transactions and Capital Account Convertibility which refers to convertibility in respect of capital transactions in terms of inflows and outflows. In India Full
Current account convertibility is already present which means that small transactions for any specific purpose such as travelling abroad or study purpose but currently India has restriction over Capital Account Convertibility which means that before doing any financial transaction or sale/purchase of assets which come under capital account one will have seek the permission of
Reserve Bank of India.
In more specific terms Capital Account Convertibility according to Tarapore Committee Report
1997 means "the freedom to convert the local financial assets into foreign financial assets and vice-versa at market determined rates of exchange. It is associated with the changes of ownership in foreign/domestic financial assets and liabilities
Capital Account Convertibility A Boon Or A Bane Economics Essay
Capital Account Convertibility A Boon
Or A Bane Economics Essay
Currency Convertibility means ease with which a particular currency or domestic currency can be converted into any other international currency and vice versa. Based on their convertibility currencies can be categorized into three groups namely:
Non Convertible currencies are those which cannot be converted into other internationally accepted currencies and vice versa i.e. countries of such currencies do not participate in FOREX
Markets.
Partially Convertible currencies are those which can be traded in the market with some restrictions from central bank of the country i.e. they can't be freely traded.
Fully Convertible currencies are those which can be freely traded without any restrictions from the central bank of the country.
Currency convertibility can be talked about in terms of two specific things which are Current
Account Convertibility which refers to freedom in conversion in respect of payments and transfers of current international transactions and Capital Account Convertibility which refers to convertibility in respect of capital transactions in terms of inflows and outflows. In India Full
Current account convertibility is already present which means that small transactions for any specific purpose such as travelling abroad or study purpose but currently India has restriction over Capital Account Convertibility which means that before doing any financial transaction or sale/purchase of assets which come under capital account one will have seek the permission of
Reserve Bank of India.
In more specific terms Capital Account Convertibility according to Tarapore Committee Report
1997 means "the freedom to convert the local financial assets into foreign financial assets and vice-versa at market determined rates of exchange. It is associated with the changes of ownership in foreign/domestic financial assets and liabilities