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 ?
Foreign exchange controls mean that, other than for tourists' needs, the RMB is only available on a very limited basis to non-residents.
On Wednesday, the bank said that it would further liberalize foreign exchange controls to boost business competitiveness.
Standard & Poor's cut Iceland's local currency credit ratings by one notch to BBB, citing the "potentially prolonged application of foreign exchange controls.
Since South Africa operates foreign exchange controls, the SARB must ratify all international trade agreements.
These include: setting up special monitoring units, providing fiscal stimulus packages, revising budget expenditures, targeting assistance to key sectors, strengthening the banking sector, putting in place stricter financial markets regulation, making expansionary monetary policy, and foreign exchange controls to prevent excessive currency depreciation and capital flight
Gono also said that some foreign exchange controls would be relaxed and gold producers can now sell bullion directly and not via the central bank as previously required.
Ras Al Khaimah is becoming a top investment hotspot in the UAE, with factors such as 100 per cent income and corporate tax exemptions; 100 per cent capital and profit repatriation; easy availability of labour; easy licensing procedures; excellent port facilities; and absence of foreign exchange controls, trade barriers and quotas, attracting investors from across the globe.
In its latest "International Narcotics Control Strategy Report--2007", it said "Macau's free port, lack of foreign exchange controls, and significant gambling industry create an environment that can be exploited for money laundering purposes.
7billion abroad last year and has just relaxed its foreign exchange controls, which is certain to send that figure through the roof.
In the East this need for the industry to be a big importer of components has combined with creaking foreign exchange controls in China and India to be a key factor holding back growth in output.
Xinhua quoted Zhou as saying in an exclusive interview that China has made efforts to prepare commercial banks for a more flexible exchange rate in the future and relaxed foreign exchange controls as part of the preparations.
Lord Howe, who was chancellor during Margaret Thatcher's first term as Conservative prime minister, also won plaudits for ending foreign exchange controls.

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