In a country with strict foreign exchange regulations, the demand for foreign currency will be satisfied in the holding of foreign currency assets abroad and outside the domestic banking system.
For instance, the political environment (industrial policy, licensing policy, foreign exchange regulations, banking policy, technological development and social change) form the framework within which an enterprise has to function.
Additionally, rights issues are considered favourably by non-resident parties since that is one of the few instances where the pricing norms prescribed under the foreign exchange regulations are not applicable.
Private participation remains constrained, however, by the lack of investment funds, input/output pricing limits, cumbersome customs and foreign exchange regulations, and poor marketing.
