What is foreign exchange control?
Foreign exchange controls are restrictions that governments place on the purchase or sale of foreign currencies by their own people or on the purchase or sale of local currencies by foreigners.PurposeForeign exchange controls are used by countries that want to have greater control over their own monetary policy by limiting the involvement of foreigners or foreign currencies in their local economy.Fixed Exchange RatesSome governments fix the value of their local currency to that of a foreign currency rather than allowing it to fluctuate freely.Ban or Limit the Use of Foreign CurrencyAnother common type of foreign exchange controls are bans on the use of foreign currency for exchanges inside the country. This technique can be used to force wider use of a local currency, hopefully increasing its stability.Bans on Possessing Foreign CurrencyGovernments may also enact bans or limits on the possession of foreign currency within national borders. These limits can make it difficult or impossib
