Single exchange rate and compound exchange rate

Single exchange rate

Single exchange rate is the symmetry of compound exchange rate. In countries with foreign exchange control, there is only one official exchange rate for the same foreign exchange, and all foreign exchange transactions are settled at the same exchange rate. Under the single exchange rate system, a bank will not charge the customer any service charge for each foreign exchange if it has the exchange rate difference income. If the bank only issues a single list price for each foreign exchange, the bank will use the same price when buying and selling foreign exchange. Since there is no foreign exchange difference, it is necessary to calculate and charge the handling fee from the customer according to the prescribed rate one by one.

Compound exchange rate

Compound exchange rate means that a currency (or a country) has two or more exchange rates. Different exchange rates are used in different international economic and trade activities. Compound exchange rate is a product of foreign exchange control. Also known as multiple exchange rate or multiple exchange rate. It is the symmetry of the "single exchange rate".

The functions of compound exchange rate are as follows:

1. Restrict the inflow of foreign hot money.

2. Expand exports and restrict imports.