It refers to the restrictive measures imposed by a government on entry and exit in order to balance the international balance of payments and maintain the country.
Also known as foreign exchange management in China, an international trade policy in which the government imposes restrictions on imports by decree.
Control on Foreign Exchange Earnings from Exportation The strictest stipulation in export exchange control is that exporters must officially sell all their foreign exchange earnings to designated banks.
When applying for an export license, the exporter should specify the price, quantity, settlement, payment method and time limit of the exported commodities and submit the L/C for inspection.
Control on Foreign Exchange Imports Control on foreign exchange imports usually means that an importer can purchase a certain amount of foreign exchange at a designated bank only with the approval of the exchange control authority.
The exchange control authority decides whether to approve an importer’s purchase of foreign exchange according to the import licence.
In some countries, the approval of import exchange is done at the same time as the issuance of import license.
Control of Non-tradable Foreign Exchange Non-tradable foreign exchange involves all kinds of foreign exchange receipts and payments except trade balance and capital imports and exports.
The control of non-trade foreign exchange income is similar to the control of export foreign exchange income, that is, the units or individuals concerned must sell all or part of the foreign exchange income and expenditure to designated banks at the official exchange rate.
To encourage people to obtain non-trade foreign exchange income, governments may implement other measures such as foreign exchange retention system, allowing residents to open personal service income and carry money in foreign exchange designated banks, and exempt from interest income tax.
Foreign Exchange Control on Capital InportsDeveloped countries usually adopt measures to restrict capital inportsfor the purpose of stabilizing financial markets and exchange rates so as to avoid excessive international reserves and inflation caused by capital inflows.
Among the measures they have taken are higher reserve requirements for banks to take deposits from non-residents;
No interest or reciprocal interest is paid on non-resident deposits;
Restrict non-residents from buying securities of the country.
Foreign Exchange Control on the Export of Capital Developed countries generally adopt policies to encourage the export of capital, but they also adopt some policies to restrict the export of capital in a specific period when they are faced with serious balance of payments deficit. The main measures include: stipulating the maximum amount of foreign loans of banks;
Countries and departments that restrict overseas investment by enterprises;
Interest balancing tax will be levied on residents’ overseas investment.
Control on the Import and Export of Gold and Cash Countries with foreign exchange control generally prohibit individuals and enterprises from carrying, carrying or mailing gold, platinum or silver out of the country, or limit the amount of gold, platinum or silver that they can leave the country.
Countries with exchange controls often have a registration system for the import of their own cash, setting a limit on the import and requiring it to be used for designated purposes.
The export of the country’s cash will be examined and approved by the foreign exchange control agency and the corresponding quota will be set.
A country that does not allow its currency to be freely convertible forbids the export of its cash.
Multiple exchange Rate SystemThe imposition of price controls on foreign exchange inevitably leads to the formation of de facto multiple exchange rate systems.
A complex exchange rate system is a system in which a country’s regulations and government actions result in two or more exchange rates between that country’s currency and the currencies of other countries.
Canadian dollar falls on hold;
The new rules sent the pound to its lowest level in nearly a year.
Please pay attention to the specific operation, the market is changing rapidly, investment needs to be cautious, the operation strategy is for reference only.
