Target movements can introduce movement error in absolute distance measurement using frequency-scanning interferometry. It is deduced that movement error depends on the optical path difference displacements during the scan and the laser frequency at the endpoint of the scan. The former can be obtained directly by using a high-accuracy wave meter; for the latter, heterodyne interference frequency division multiplexing technique is proposed and a novel frequency-scanning interferometer for absolute distance is designed to achieve simultaneous measurement of the absolute distance and the optical path difference displacements. Movement error-compensation can be fulfilled by eliminating the error phase offset related to laser frequency at the endpoint of the scan and the optical path difference displacements. Theoretical analysis of the feasibility of the system and the uncertainty of movement compensation with precision measurement simulation indicate that the compensation method is efficient and effective. Optical path difference displacements measurement can reach nanometer level for rather high-speed target. The error introduced by movement compensation is tens of microns with the frequency-scanning range of 100 GHz at tens of meters distance range.