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foreign exchange controls

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Foreign exchange controls
Various forms of controls imposed by a government on the purchase/sale of foreign currencies by residents or on the purchase/sale of local currency by nonresidents.

foreign exchange controls
Restrictions that are imposed by a nation on the free exchange and convertibility of its own currency. Foreign exchange controls are most often instituted by countries whose currencies are weak and whose citizens prefer to hold and use the currencies of other nations. Institution of foreign exchange controls hinders foreign investors who wish to extricate their funds.


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However, with the Chinese government continuing to impose domestic sales quotas, local procurement requirements, and foreign exchange controls, these vendors have requested component suppliers set up factories in China too so as to reduce production cost.
On the other hand, the foreign exchange controls so far appear to have had a limited impact on banks as these have continued to honour foreign exchange liabilities, which are mostly limited to letters of credit and correspondent banks, using pre-existing foreign currency assets.
 
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