Overview

exchange rate regime


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The rate of exchange between currencies can be managed in a variety of ways:

Single currency peg - one country's currency is linked to that of another country, with little opportunity for adjustment.

Composite currency peg - one country's currency is linked to a basket of currencies of its major trading partners. Often a weighted average is used.

Managed float - this is effectively a single currency peg with more frequent adjustments to the rate permitted.

Independent float - rates of exchange are determined only by market forces.

Subjects: Economics.


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