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Explain four methods for exchange control applied by the government.

Explain four methods for exchange control applied by the government.

Answers

Simon
• Exchange clearing. In this method, two countries agree to match their receipts and payments. Importers in either country will then pay in local currencies, periodically the two countries will match the receipts and payments in their countries so that the proceeds from the exports of one country to the other are used to pay for the imports from other country.
• Exchange pegging. In this method the government maintains the exchange rates at a specific level and ensures that the rates stay within the prescribed limits by buying or selling its currency to bring the rates into this limits.
• Exchange restriction. In this method, the government requires that all foreign exchange deals must be transacted through its central bank. The central bank controls all the monetary transactions to avoid fluctuations in the rates.
• Blocked currency accounts. In this method, payments by citizens or residents to foreigners are paid into blocked accounts in the name of the foreigners. These beneficiaries can then only draw the funds from such accounts with the permission and approval of the central bank and for specified purposes.
skilled writter answered the question on May 1, 2018 at 16:26

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