Explain why an economy may adopt a dual exchange rate system.
- To discourage the importation of harmful and luxurious goods.
- Making foreign exchange readily available to all categories of importers and investors
- Promoting investment in the economy
- Promoting growth of domestic industries
- To lessen pressure on foreign reserves during an economic shock that results in capital flight by investors.The hope would be that such a system can also alleviate inflationary pressures and enable governments to control foreign currency transactions.
- It is a way to control local inflation and importers’ demand for foreign currency.
CATEGORIES Economics
TAGS Dr. Bbosa Science
