Syllabus T. Y. B. A. Paper : IV advanced economic theory with effect from academic year 2010-11 in idol

4.Exchange control: 
This is considered to be an important measure of correcting 
the disequilibrium in the BOP. Under this method, all the foreign 
exchange transactions are directly controlled by the central bank of 
a country. The exporters need to surrender their foreign exchange 
to the central bank which makes the same available for the purpose 
of imports. It is done by payment agreement, multiple exchange 
rate, clearing agreement, blocked account, intervention etc. 
 
It can be brought by two ways; 
a) Intervention; 
it is also known as direct action by the government or the 
monetary authority in the foreign exchange market implies active 
participation by authorities so as to add the demand for or the 
supply of a foreign currency in the exchange market thereby 
influencing the rate exchange. 

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b) Exchange restrictions: 
It is very strong measures which are adopted to curtail the 
freedom of the market. Broadly speaking, the objective is to reduce 
the supply of home currency in the exchange market, the objective 
is to reduce the supply of home currency in the exchange market 
so as to give it a higher value by restricting or prohibiting a part of 
the supply from reaching the market. 
B) GENERAL/ NON MONETARY MEASURES 
A BOP deficit country may resort to non-monetary measures 
to correct BOP disequilibrium. The following are some of the non-
monetary measures: 
1. Quotas: 
 
It is one of the direct control for bringing BOP position in 
normal state. The government may impose quotas on imports, so 
as to restrict the imports, which in turn would improve the BOP 
position. here the restrictions are put not on the value of the goods 
but one the quantities itself. It is the most effective say of restricting 
free trade. it safeguards the interest of nation. There are various 
types of quotas such as: 
A) Tariff Quota 
B) Unilateral Quota 
C) Multilateral Quota 
D) Bilateral Quota