Exchange Control

Exchange control implies governmental intervention in the matter of foreign exchange and the exchange rates according to Haberler exchanged control is state regulation excluding the free play of economic force form the foreign exchange market. Thus when the exchange control is full fledged the foreign exchange market is ruled by the vobernemtn decision. It forbids free transaction in foreign exchange.

Objectives of exchange control

In many countries of the world exchanged control is regarded as a necessary evil. There are several objectives in practicing exchanged controls. The main object of foreign exchanged control Amy is stated as follows:

1. Conservation of foreign exchange: Exchange control may be introduced by the monetary authority to conserve the gold, bullion foreign exchange currencies etc. foreign exchange resources of the country it may be necessary to ensure the availability of sufficient amount of forint exchange needed to buy essential foreign goods.

2. Check on flight of capital: Under the free exchanged system there is the danger of huge outflow of capital which may weekend the country economy. Especially erratic shifting of capital tends to accentuate the disequilibrium in the balcony of payments and it also adversely affects futures growth of the country. Exchange control however offers a prompt and effective means to prevent such capital outflow.

3. Correcting disequilibrium in balance of payments: To correct the deficit in the balance of payments the country needs to put a curb on imports. For this purpose the use of foreign exchange earnings by exporters for import of goods   must be checked through appropriate exchange control again exchange control is essential to implement an import policy very effectively. In short exchange control may be introduced to protect the country balance of payments.

4. Stabilization of exchange rates: In a free exchange market exchange rate is a fluctuating phenomenon. Thus exchange control may be adopted to maintain exchange rates at an arbitrarily chosen fixed point.

5. Protecting the interest of home producers: Exchange control may be used for giving protection to domestic reducers by restricting the competition form foreign traders through import control.

6. Redemption of external debt: The government may use the exchange control device to obtain foreign exchange needed for repaying or servicing of ties foreign loans.

7. Effective economic planning: For successful economic planning foreign trade has to be coordinated with planned programmes and the outflow of capital should be restricted in order to make it available to domestic industries. Thus for mitigating the economic repercussions of foreign trade endangering economic plans, exchange exchange control becomes inevitable.

8. Maintaining over- value of home currency: Sometimes exchange control is used in order  to maintain the external value of the country currency at an overvalued level for this purpose the available foreign exchange resource are rationed for use of specific and important purposes only and the government thereby seeks to adjust total demand with total supply of foreign currencies.

9. Generating public revenue: Under exchange control b adopting multiple exchange rates system the government can yield revenue income through difference of average buying and selling rates less costs of administration.

10. To prevent spread of depression: Depression in a bight countryman spread from country to country via international economic relations. Exchange control may work as a preventive against such spread of depression by controlling the main doors imports and exports.

Services: - Exchange Control Homework | Exchange Control Homework Help | Exchange Control Homework Help Services | Live Exchange Control Homework Help | Exchange Control Homework Tutors | Online Exchange Control Homework Help | Exchange Control Tutors | Online Exchange Control Tutors | Exchange Control Homework Services | Exchange Control