Explain the custodian of foreign exchange reserves function of RBI?
RBI is the custodian of country’s stock of gold and international currencies. Central maintains the stability of exchange rate. All the earnings are deposited with RBI at the time of foreign exchange transactions. RBI can bring the external value of currencies at par with internal value in the sale and purchase of foreign currencies. RBI helps the government to pursue a coordinated policy towards balance of payment situation in a country.