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 on foreign currencies in a country. These controls may range from the basic, such as banning the use of a foreign currency in domestic stores and shops, to the dramatic, such as banning currency conversion. Every country has some foreign exchange controls to protect their currencies, but nations with weak currencies are more likely to impose more controls. See also: Pegged Currency, Crawling Peg.

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.

foreign exchange controls

the application of restrictions on the availability of FOREIGN CURRENCIES by a country's central bank, to assist in the removal of a BALANCE OF PAYMENTS deficit and to control disruptive short-run capital inflows and outflows which tend to destabilize the country's EXCHANGE RATE. Because importers need to purchase foreign currencies from the country's central bank (via their commercial banks) in order to buy products from overseas suppliers, by cutting off the supply of foreign currencies the authorities can reduce the amount of IMPORTS to a level compatible with the foreign currency earned by the country's EXPORTS. Exchange controls may be applied not only to limit the total amount of currency available but can also be used to discriminate against particular types of imports, thus serving as a form of PROTECTIONISM. See FOREIGN EXCHANGE MARKET.

foreign exchange controls

restrictions on the availability of FOREIGN CURRENCIES by a country's CENTRAL BANK to assist in the removal of a BALANCE OF PAYMENTS deficit and to control disruptive short-run capital flows (HOT MONEY) that tend to destabilize the country's EXCHANGE RATES. Where importers can only purchase foreign currencies from the country's central bank (via their commercial banks) in order to buy products from overseas suppliers, by cutting off the supply of foreign currencies the authorities can reduce the amount of IMPORTS to a level compatible with the foreign currency earned by the country's EXPORTS. Exchange controls may be applied not only to limit the total amount of currency available but can also be used to discriminate against particular types of imports, thus serving as a form of PROTECTIONISM. See FOREIGN EXCHANGE MARKET.
References in periodicals archive ?
Argentina's central bank has said that it will immediately end its foreign exchange controls.
Argentina decided to loosen strict foreign exchange controls a day after the peso suffered its steepest daily decline since the country's 2002 financial crisis .
Foreign exchange controls and restrictions are now minimal.
Argentina's business class has been angered by Kirchner's failure to control inflation and protectionist economics, import restrictions, the nationalization of companies such as energy giant YPF and foreign exchange controls.
ClickPress, Thu Jun 20 2013] After foreign exchange controls were imposed in Argentina in late 2011 and early 2012, the real estate market plummeted by 40% in volume terms, according to CAME (local chamber of small and medium-sized enterprises).
Remittance funds may also be used as a form of investment by the recipient given that the country's policies and foreign exchange controls allow it, as it was made possible in the 1990s.
The GOZ's switch to this "multi-currency regime" dramatically reduced opportunities for money laundering and financial crime arising from the multiple exchange rates and opaque foreign exchange controls that were in place until 2009.
The bank's success has occurred in spite of regional credit crises, and the troubles of individual members, who have weathered devaluations, foreign exchange controls, and radical shifts in economic policies since the bank's creation.
Once the portfolios had been constructed attempts were made to determine the influence on them of the global and local markets in order to establish the degree of segmentation of the Venezuelan market before and after the introduction of foreign exchange controls.
As an enforcer of the 'Washington Consensus', the Bank emphasised loan conditions relating to trade liberalisation, privatisation of state-owned enterprises, banking deregulation, removal of foreign exchange controls and its own interpretation of what constitutes 'good governance'.
Foreign exchange controls mean that, other than for tourists' needs, the RMB is only available on a very limited basis to non-residents.
When cotton prices fell, Uzbekistan in 1996 and Turkmenistan in 1998 resorted to draconian foreign exchange controls, which in turn led to other restrictions on economic freedom.

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