The article discusses dual exchange rate systems, where different types of foreign transactions go through separate markets. Early models show that both fiscal and monetary policies can be effective in dual systems. Later models focus on how external capital flows affect economies with dual rates. Studies suggest that dual systems may not provide as many benefits as expected. A new model in the article shows that dual rates can better protect domestic economies from external interest rate changes compared to fixed or floating rates. This model also considers government intervention and imperfect information. Overall, dual exchange rate systems can help insulate domestic activity from external factors, although not perfectly.