What is meant by exchange control explain the methods of exchange control?

The direct methods of exchange control are adopted by the central bank with the object of restricting the use and the quantity of foreign exchange. These include intervention, exchange restriction, exchange clearing agreements and payments agreements.

What are the unilateral methods of exchange control?

Unilateral methods:

Exchange pegging: Exchange pegging refers to the policies of fixing the exchange value of the currently according to the some deserved rate.
Standstill agreement :
Compensation agreement:
Payment agreement:
Foreign exchange rationing:
Blocking of foreign exchange:

What is indirect methods of exchange control?

Three important indirect methods of exchange regulation are: 1. Changes in Interest Rates 2. Tariffs, Duties and Import Quotas 3. Export Bounties!

What are the merits and demerits of exchange control?

Fixed Exchange Rate System: Merits and Demerits

Exchange Rate Stability:
Promotes Capital Movements:
Prevents capital outflow:
Prevents Speculation in foreign exchange market:
Serves as an anchor against inflation:
Promotes economic integration of the world:
Promotes growth of internal money and capital markets:

Which is the main objective of exchange rate management?

1. Correcting Balance of Payments: ADVERTISEMENTS: The main purpose of exchange control is to restore the balance of payments equilibrium, by allowing the imports only when they are necessary in the interest of the country and thus limiting the demands for foreign exchange up to the available resources.

What is the function of the exchange control department?

What Are Exchange Controls? Exchange controls are government-imposed limitations on the purchase and/or sale of currencies. These controls allow countries to better stabilize their economies by limiting in-flows and out-flows of currency, which can create exchange rate volatility.

When govt control the foreign exchange is called?

Under mild system of exchange control, also known as exchange pegging, the Government intervenes in maintaining the rate of exchange at a particular level. Under this system, the Government maintains on ‘Exchange Equalization Fund’ in foreign currencies.

What are the different types of exchange control?

The various methods of exchange control may broadly be classified into two types, direct and indirect. Direct methods of exchange control include those devices which are adopted by governments to have an effective control over the exchange rate, while indirect methods are designed to regulate international movements of goods.

What do you mean by foreign exchange controls?

Foreign exchange controls are various forms of controls imposed by a government on the purchase/sale of foreign currencies by residents, on the purchase/sale of local currency by nonresidents, or the transfers of any currency across national borders.

What is the unilateral method of exchange control?

In unilateral methods of exchange control, a government applies exchange control without consultation with other governments. These methods are discussed are as under; It is the method of exchange control. Exchange pegging refers to the policy of fixing the exchange value of the current according to some desired rate.

How does the government control the exchange rate?

In other simple words, government puts restrictions on the sale and purchase of foreign currencies and refers a measure which influences the foreign exchange rate and closing free movements of foreign exchange in the country.