Dual Exchange Rate

Dual Exchange Rate

A situation in which a currency has two official exchange rates, one pegged to another currency and the other floating. Each is used for different things. The exchange rate for money used for sectors seen as essential, such as food, is fixed, while "non-essential" sectors are allowed to float. A dual exchange rate allows a country to devalue its currency to reflect market realities without the pain of high inflation that usually accompanies severe devaluation. Critics allege that a dual exchange rate is less efficient than a straightforward devaluation and acts as a tariff on industries the government sees as luxuries.
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Iran currently has a dual exchange rate regime where the 'official rate', largely used for the import of basic goods and staples, is 15% stronger (in IRR terms) than the 'free market rate'.
In my opinion, the dual exchange rate constitutes a main drawback to any new or existing investment.
The directive was widely expected, as Valiollah Seif, the governor of the Cental Bank, has long said the dual exchange rate system would be ended soon after sanctions were lifted.
3, and streamline the previous three-tiered system into a dual exchange rate mechanism.
However, the dual exchange rate system was reintroduced again in 1985, when South Africa was faced with large-scale capital outflows.
The bolivar's depreciation, in conjunction with the government's H113 introduction of a dual exchange rate system, will have a tangible effect on the commercial real estate sector by curtailing business activity.
The bolivar's depreciation, in conjunction with the government's H113 introduction of a dual exchange rate system in Venezuela, will have the most tangible effect on the Commercial Real Estate sector in the short term by curtailing business activity.
It extends the argument of the effects of flexible and fixed ERRs on fiscal discipline--as described by Tornell and Velasco (1998, 2000)--by adding a third ERR: dual exchange rate regime.
The plan for Myanmar's boldest economic reform yet was laid out by central bank deputy governor Maung Maung Win in documents seen by Reuters on Tuesday that said preparations to unify the dual exchange rate should be made by the end of this month.
While it is certainly true that China was relatively unaffected by the Asian Crisis in 1997, the author fails to mention, among other things, the unification of the China's dual exchange rate system on 1 January 1994, which led to a substantial yuan devaluation.
1984): Capital controls, the dual exchange rate, and devaluation, NBER Working Paper # 1324.
Monetary policy consists mainly of ensuring that aggregate spending expands in line with output growth, although the existence of the large informal economy and the dual exchange rate complicates this task.

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