Want to buy Cuban pesos or Iranian rials? You may be in for a shock when you realize that getting the currency you want might not be as easy as walking up to your favourite foreign exchange retailer. Some currencies are considered restricted, meaning buying, selling or sending money may be more difficult than expected.
Wait, how can a currency can be restricted?
We know. It’s a shock when you expect your bank to carry US currency on hand and you realize it’s going to take 4 days for them to receive it. But it can be an even bigger shock when you’re planning a vacation to an obscure or exotic destination, and a foreign exchange specialist like Continental Currency Exchange has restricted access to the currency you need. Why is a currency “restricted”, and what should you do about it?
Why are some currencies restricted?
Before the 1980’s and 1990’s most countries in the world had some sort of currency restrictions. As free markets spread around the globe however, the majority of countries abandoned these restrictions.
There are many reasons that a currency may be restricted. Most often the restrictions are voluntarily imposed by the government of the country which issues the currency. For example, recently Angola’s government chose to restrict foreign currency transactions and limit the amount of currency available to travellers, in part because of falling oil prices.
The decision to restrict currency is often made to:
- Prevent currency devaluation
- Prevent capital flight
- Limit access to foreigners
By preventing residents or non-residents to exchange a currency, the hope is that the value of that currency remains more stable.
Types of currency restrictions
Some types of currency restrictions will affect Canadians more than others. Overall most currency restrictions usually involve one or more of the following:
- Banning or limiting locals from holding foreign currency
- Setting exchange rates (rather than letting the market determine rates)
- Banning currency exchange or limiting it to currency exchange retailers approved by the government
- Banning or limiting the use of foreign currency within the country
- Limiting the amount of money that may be imported or exported
If the currency you need is listed on the bottom of this page, we recommend calling or visiting your nearest Continental Currency Exchange branch to determine whether the currency you need is restricted and how that’s going to affect you, if at all.
Wait, so why are some currencies restricted?
As a previous FX101 explains, there are many factors which affect exchange rates, one of which is supply and demand.
Simply put, the more people that buy or want to buy a currency the higher the exchange rate will climb and the more people selling or trying to sell a currency, the lower the exchange rate will fall. So in times of economic trouble a country may stop people from selling their currency in order to artificially increase the value.
Similarly, limiting foreign exchange prevents capital flight. Investors can’t pull their money out of a country without exchanging the local currency for that of another country. Imagine if real estate or stock market investors all tried to sell at once – the economy would collapse! By limiting currency exchange, investors simply can’t sell because there would be nowhere for their money to go.
Sometimes the decision to limit access to foreign currency is a political decision rather than an economic one, especially in countries like Venezuela, Cuba and North Korea. Similarly, countries may impose sanctions on one another to prevent their citizens from doing business with or visiting certain countries.
So in short, the reason why some currencies are restricted is because of their political and economical ties to their backing nation. But there are many types of restrictions, and each accompany a currency with varying degrees of limitations.
What Currencies are Restricted?
Countries may impose, modify or remove currency controls at anytime, and as such this list should only be treated as a guide. However, at the date of writing (February 23, 2016) the following countries imposed some currencies controls that may affect Canadians seeking to buy foreign currency. If you need to buy one of the following currencies be aware that there may be some restrictions.
We recommend calling or visiting your nearest Continental Currency Exchange branch to determine whether you may buy, sell or send any of the currencies listed below:
Angola | Angolan kwanza | AOA
Armenia | Armenian dram | AMD
Belize | Belize dollar | BZD
Cameroon | Central African franc | XAF
Cuba | Cuban peso | CUP
Egypt | Egyptian pound | EGP
Ethiopia | Ethiopian birr | ETB
Fiji | Fijian dollar | FJD
Georgia | Georgian lari | GEL
Ghana | Ghanaian cedi | GHS
Iran | Iranian rial | IRR
Sri Lanka | Sri Lankan rupee | LKR
Libya | Libyan dinar | LYD
Malaysia | Malaysian ringgit | MYR
Mauritius* | Mauritian rupee | MUR
Myanmar | Burmese kyat | MMK
Namibia | Namibian dollar | NAD
Nepal | Nepalese Rupee | NPR
Nigeria | Nigerian naira | NGN
North Korea | North Korean won | KPW
Pakistan | Pakistani rupee | PKR
Papua New Guinea | Papua New Guinean kina | PGK
Samoa | Samoan tala | WST
Sudan | Sudanese pound | SDG
Tunisia | Tunisian dinar | TND
Ukraine | Ukrainian hryvnia | UAH
Uzbekistan | Uzbekistani som | UZS
Venezuela | Venezuela bolivar | VEF
Zimbabwe** | Zimbabwean dollar | ZWD
* Exchange controls were officially ended in 1994, but foreign investments and their profits must provide proof of origin and may be taxed)
**Discontinued in 2009, no longer legal tender but still circulates illegally
For a complete list of currencies that Continental offers, click HERE. If you want to purchase currency now, check out FXtoGO! For more information about the wide world of foreign exchange, click HERE.
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