Abstract
In this article an analysis has been made of the influences of the dual exchange rate system on short-term capital movements and the balance of payments. An effort has been made to connect the till now separate theories of the dual exchange rate system and the short-term capital movements. In the analysis the role of the forward exchange market has been explicitly taken into account. Several doubts as expressed in literature about the feasibility of an effectively operating dual rate system are examined. Some conclusions are drawn about the probable resultant of the forces which affect the size of the premium of the financial spot rate with respect to the commercial spot rate.
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