Direct foreign exchange control refers to the direct and mandatory control of all foreign exchange transactions by the central bank or other financial and monetary authorities designated by the government of a country through laws and regulations .
The foreign exchange management department of the government directly controls and manages foreign exchange transactions , foreign exchange rates , sources and use of foreign exchange funds. These include administrative control and management, quantity control and management, cost control and management. Where foreign exchange funds are insufficient and foreign exchange markets are not sound, most countries implement direct foreign exchange controls. It is a comprehensive and strict foreign exchange control method for the government to directly intervene in foreign exchange transactions, stabilize the exchange rate , prevent foreign exchange speculation such as foreign exchange evasion and arbitrage, and seek the balance of payments. Its characteristics are that the official foreign exchange market replaces the free foreign exchange market, and the supply and demand of foreign exchange are directly controlled through the official exchange rate leverage.
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