Read the passage below carefully and answer the five questions that follow

Capital flows, exchange rates and the interest rates are causes of immediate concern to the national economies. Central banks of various countries have been using a variety of methods with the excessive capital inflows. Foreign portfolio investment have a direct and indirect impact on exchange rates, valuation of traded assets and yields of various government and corporate securities.

RBI, in the post-pandemic scenario and the recent Russia-Ukraine war situation is working on multiple options to stabilize the exchange rates by protecting both the exporters and importers. One way which RBI adopts to maintain a desirable level of exchanges rates is to mop up nets foreign exchange assets from scheduled commercial banks in exchanges of domestic currency (*) assets. The liquidity flows are, in essence, inflationary. RBI has projected a comfortable GDP rate for the current fiscal and believes a reasonable level of CPI inflation as 5.3%.

The retail inflation, according to the RBI governor, recently is likely to be 4.5% in 2023 fiscal. With this perspective, the repo rate and reverse repo rate remain at 4% and 3.35%, respectively, since May 22, 2020. A balancing act between economic growth and inflation is visible. Though the RBI rates are consistent, the burden on borrowers for the short-term and long- term, is still unpredictable.