UPSC Prelims 2015 Question:

Convertibility of rupee implie

Explanation:

Convertibility is the ease with which a country's currency can be converted into gold or another currency through global exchanges. 

• It indicates the extent to which the regulations allow inflow and outflow of capital to and from the country. Currencies that aren't fully convertible, on the other hand, are generally difficult to convert into other currencies. India's rupee is a partially convertible currency—rupees can be exchanged at market rates in certain cases, but approval is required for larger amounts. Thus, a convertible rupee implies how freely the rupee can be converted to other currencies and vice versa.
  
  
• A convertible currency is  seen as a reliable store of value, meaning an investor will have no trouble buying and selling the currency.
  
  

Therefore, option (3) is the correct answer.  

Subject: Economics |Foreign Trade and Investment