Exchange controls

Definition

Exchange controls are government-imposed limitations on the purchase and sale of foreign currencies by residents or on the transfer of funds to other countries. These measures are used to stabilize the national economy, manage balance of payments, and protect currency values.

Related terms

Balance of Payments: A financial statement that summarizes a country's transactions with the rest of the world, including exports, imports, and capital flows.

Currency Devaluation: A deliberate downward adjustment to a country's currency value relative to another currency, typically aimed at boosting exports.

Trade Deficit: Occurs when a country's imports exceed its exports during a specific period, indicating more money flowing out than coming into the national economy