Floating Exchange Rate: UPSC Daily Important Topic | 21 January 2022

Floating Exchange Rate

•A floating exchange rate is one that is determined by supply and demand on the open market.

•A floating exchange rate doesn’t mean countries don’t try to intervene and manipulate their currency’s price, since governments and central banks regularly attempt to keep their currency price favorable for international trade.

•A fixed exchange is another currency model, and this is where a currency is pegged or held at the same value relative to another currency.

•Floating exchange rates became more popular after the failure of the gold standard and the Bretton Woods agreement.