DEFINITION of 'Dual Exchange Rate'

A situation in which there is a fixed official exchange rate and an illegal market-determined parallel exchange rate. The different exchange rates are used in different situations, either in exchanges or evaluations, as mandated by the government.

BREAKING DOWN 'Dual Exchange Rate'

Argentina adopted a dual exchange rate following its catastrophic economic troubles in the beginning of 2002. The illegal market-determined exchange rate would be preferred in a situation such as a cost-benefit analysis conducted on behalf of the Argentinian government.

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