It deals Exchange Control & Exchange Rate

1. N.DHINAKARAN
ASSISTANT PROFESSOR OF ECONOMICS
VIVEKANANDA COLLEGE
TIRUVEDAKAM WEST
MADURAI DISTRICT - 625234 TAMILNADU

2. Exchange Control
• Meaning:
Exchange control is one of the important devises to control trade and
payments .
It aims at equilibrating foreign receipts and payments , not through such
market forces or flexible exchange rates but through and indirect control of
foreign exchange.
Exchange control means that all foreign receipt and payments in the form of
foreign currencies are controlled by Government.

3. Objectives of Exchange Control
• Over – Valuation
• Under – Valuation
• Stabilisation of Exchange Rates
• Prevention of Capital
• Protection of Domestic Industries
• Checking Non – essential imports
• Help to the planning process
• Remedying Unfavourable Balance of Payments
• Earning Revenue
• Repaying Foreign Debt

4. Methods of Exchange Control
• Direct Methods
• 1. Intervention
• 2. Exchange Restriction
• 3.Exchage Clearing Agreements
• 4.Payments Agreements
• Indirect Methods
• 1. Quantitative Restrictions
• 2. Export Bounties
• 3. Raising Interest Rates

5. • Meaning of Foreign Exchange (FOREX)
FOREX refers to foreign currencies. The mechanism through which
payments are effected between two countries having different currency
systems is called FOREX system . It covers methods of payment, rules
and regulations of payment and the institutions facilitating such
payments.
Definition of FOREX
• “FOREX is the system or process of converting one national currency
into another, and of transferring money from one country to another”.

7. Determination of Equilibrium Exchange Rate

8. Determinants of Exchange Rates

9. THANK YOU