I think you’ve all heard of it, but let me tell you today what the basic form of regulation is.
Basic methods of foreign exchange control: 1. Control of foreign exchange Earnings from exports Under the export exchange control, the most stringent requirement is that exporters must settle their accounts officially and sell all foreign exchange earnings to designated banks.
When applying for an export license, the exporter should fill in the price, quantity, settlement, method of payment and term of payment of the exported goods and submit the L/C for inspection.
2. Controls on foreign Exchange imports Controls on foreign exchange imports generally indicate that an importer may purchase a specified amount of foreign exchange at a designated bank only with the approval of the exchange control authority.
The foreign exchange control authorities shall decide whether to approve the importer’s application according to the import license.
Some countries issue import licenses at the same time for import approval procedures.
3. Control of non-tradable foreign exchange Non-tradable foreign exchange relates to all types of foreign exchange payments other than trade balances 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 relevant unit or individual must settle all or part of the foreign exchange income and expenditure at the official exchange rate and sell to the designated bank.
In order to encourage people to obtain non-trade foreign exchange income, the government can take some other measures, such as the implementation of the foreign exchange reservation system, allowing residents to open in the foreign exchange designated banks, for personal labor income and carry money, exempt from interest income tax.
Foreign exchange Controls on capital imports The measures taken by developed countries to restrict capital imports are usually to stabilize financial markets and exchange rates in order to avoid excess international reserves and inflation caused by capital inflows.
Among the measures: higher reserve requirements for banks to take deposits from non-residents;
Non-resident deposits pay no interest or reciprocal interest;
Restrictions on non-residents buying state – owned securities.
5. 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 specific periods, such as facing serious balance of payments deficit.
The main measures include: setting the maximum limit of banks’ external loans;
Countries and departments that restrict overseas investment by enterprises;
Residents’ overseas investment is subject to interest balancing tax.
6. Gold and Cash Import and Export Control Foreign Exchange control countries generally prohibit individuals and enterprises from taking, carrying or mailing gold, platinum or silver out of the country or the amount of gold, platinum or silver out of the country.
For domestic cash imports, countries with exchange controls usually implement a registration system, set import quotas, and require their use for specified purposes.
The export of the country’s cash shall be examined and approved by the foreign exchange control agency and the corresponding quota shall be stipulated.
Countries that do not allow freely convertible currencies are prohibited from exporting cash.
7. The control of the multiple exchange rate system inevitably creates a variety of de facto.
Multiple exchange rate system.
A complex exchange rate system refers to the existence of two or more exchange rates between the currency of one country and the currencies of other countries due to the regulations and government actions of that country.
The dollar tumbled and oil prices rose to a four-week high as the emergency authorisation of COVID-19 oral drugs returned risk taking sentiment.
Please pay attention to the specific operation, the market is changing rapidly, investment needs to be cautious, the operation strategy is for reference only.
