When a government requires a permit to purchase foreign currency, the exchange rates:

Question

Quizplus · Accepted Answer

When a government requires a permit to purchase foreign currency, it usually means that they control the exchange rate and set it at a rate higher than the free market rate. This is done to restrict the outflow of currency and maintain a stable foreign-exchange reserve. In such a case, the exchange rates are not market-driven but determined by the government.

When a Government Requires a Permit to Purchase Foreign Currency