In the context of India exchange rate management, under a fixed foreign exchange rate system, which authority can officially change the fixed rate of the rupee against foreign currencies?

Introduction / Context:
This question concerns the management of the exchange rate in India under a fixed or managed regime. Although the exchange rate is more market linked today, exam questions often refer to the authority responsible for making official changes in a fixed rate system. In India, the central bank plays a central role in exchange rate policy and intervention.

Given Data / Assumptions:

• The subject is a fixed foreign exchange rate system.
• We are looking for the authority that can officially change the fixed rate.
• The options include the Reserve Bank of India, a securities regulator, the Ministry of Finance, and an investment promotion board.

Concept / Approach:
In most countries, the central bank is the principal authority dealing with currency management and foreign exchange operations, even if strategic decisions are taken in consultation with the government. In India, the Reserve Bank of India manages the foreign exchange reserves, intervenes in the market and administers relevant regulations. Traditionally, changes in the external value of the currency under a fixed system are implemented through central bank actions.

Step-by-Step Solution:
Step 1: Recognise that exchange rate management is a monetary rather than securities regulation function.Step 2: Recall that the Reserve Bank of India is the central bank responsible for currency and foreign exchange management.Step 3: Note that the Securities and Exchange Board of India regulates capital markets, not exchange rates.Step 4: Understand that while the Ministry of Finance sets overall economic policy, the operational role in changing rates lies with the central bank.Step 5: Conclude that the Reserve Bank of India is the authority associated with changing the fixed foreign exchange rate.

Verification / Alternative Check:
Most textbooks on Indian financial systems clearly state that the Reserve Bank of India manages the foreign exchange market and implements government policies regarding the exchange rate. Acronyms such as FEMA are also administered by the central bank. While the Ministry of Finance may decide on major devaluations or reforms, the day to day and technical aspect of changing or maintaining a fixed rate is executed by the central bank, which supports choosing the Reserve Bank.

Why Other Options Are Wrong:
The Securities and Exchange Board of India oversees stock exchanges, mutual funds, and other capital market intermediaries, not the foreign exchange rate of the rupee. The Ministry of Finance is a policy making body but the question asks about the authority under a fixed rate system, which is operationally the central bank. The Foreign Investment Promotion Board dealt with foreign investment clearances and not direct exchange rate settings. Therefore, all these options are less accurate than the Reserve Bank of India.

Common Pitfalls:
Some candidates choose the Ministry of Finance simply because it is a high level government body, overlooking the technical role of the central bank. Others may be misled by titles that contain the word foreign such as the Foreign Investment Promotion Board. To avoid such errors, remember that currency and exchange rate questions usually point towards the central bank unless clearly stated otherwise.

Final Answer:
Under a fixed foreign exchange rate system in India, the authority associated with changing the official rate is the Reserve Bank of India.