Consider the following statements : The price of any currency in international market is decided by the I. World Bank. II. demand for goods/services provided by the country concerned. III. stability of the government of the concerned country. IV. economic potential of the country in question. Of these statements :

Exchange rates in practice are set by market forces of supply and demand rather than by the World Bank; flexible rates fluctuate with currency demand and supply in foreign exchange markets [1]. An increase in demand for a country’s goods and services raises demand for its currency and alters the exchange rate, as shown in textbook examples where rising foreign demand shifts the exchange rate [2]. Political stability and governance affect investor confidence and capital flows, and thus influence currency valuations. Economic potential (long‑run fundamentals) also shapes currency value over time through growth and macroeconomic performance. Given the provided options, II and III are clearly correct; I is incorrect (World Bank does not set market prices).

Sources

1. [1] India and the Contemporary World – II. History-Class X . NCERT(Revised ed 2025) > Chapter 3: The Making of a Global World > New words > p. 77
2. [2] Macroeconomics (NCERT class XII 2025 ed.) > Chapter 6: Open Economy Macroeconomics > Flexible Exchange Rate > p. 92