Multiple Exchange Rates

Categories: Forex,

A system where a country will have both fixed and floating foreign exchange rates at the same time, and both can be used when exchanging currencies in that country. In this situation, the market is divided into any number of segments, each with its own exchange rate. This is frequently used to give preferential treatment to people dealing with goods and products that are the most important to the country; people importing these goods can be given a better exchange rate than people who are importing goods that are not as necessary for the country. If a country only imposes two different exchange rates at the same time, it is referred to as a dual exchange rate system.