Why do governments limit currency convertibility?
A) to preserve foreign exchange reserves
B) to spend foreign exchange reserves
C) to keep domestic companies from investing abroad
D) to allow nonresidents to convert money to foreign currencies

Question

Quizplus · Accepted Answer

Governments limit convertibility to preserve their foreign exchange reserves. A country needs an adequate supply of these reserves to service its international debt commitments and to purchase imports.

Why Do Governments Limit Currency Convertibility