Advika is a resident of India who exports hand-dyed fabrics to other nations. Since India has an exchange control system, what does this mean for Advika

The Reserve Bank of India keeps all of Advika’s foreign currency for her.

Explanation:

When a country uses exchange controls, it limits the amount of foreign currency that can come into a country. This is usually done to ensure stability in the money market of the country as well as to improve the balance of payments for the country.

One way of implementing exchange control is for all foreign currency to go through the Central bank of the country. Should a citizen need access to foreign currency, they would need to apply to the central bank to access it. With India having an exchange control system, the Reserve Bank of India keeps all foreign currency and Advika would have to apply for it should she need it.

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