Since the Second World War, multiple exchange rates have been widely used in countries, especially underdeveloped countries, experiencing balance-of-payments difficulties.2 A very wide range of combinations of export and import duties and subsidies can be effected by such a system; in practice, policy-makers develop a structure of rates by a process of trial and error. In this article we examine the conditions necessary for the simultaneous attainment of different policy objectives by a system of multiple exchange rates. We are not concerned with the advantages or disadvantages of multiple exchange rates vis-a-vis other methods for achieving the objectives in question. Multiple exchange rates may be introduced for several reasons.3 It may be designed to improve the balance of payments. It may serve to raise revenue for the government through the purchase and sale of foreign currency. And it may be used to promote a specific structure of imports and exports to fit into a general development programme devised to bring about desired changes in the economic structure of the country. This last-mentioned objective we place in the forefront of the discussion, both because it is important in a number of developing countries and also because it may well provide the only sound argument for a system of multiple exchange rates. The problem we select for examination is as follows. Given that the development programme requires the import or export of specified quantities of certain categories of goods, in what conditions can a system of multiple exchange rates be devised which will satisfy this requirement and also improve the balance of payments and the revenues of the government ?