Floating and fixed exchange rates
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Floating and fixed exchange ratesis currency exchange rates, such as the rate of exchange between the US dollar and the Yen, are said to float when market forces determine the rate, depending on market demand. They are fixed when national governments (or their associated national banks) fix the rates by international agreement and intervene in international markets to hold those rates.
Definitions
According to the Corporate Strategy by Lynch (4th edition),
- Floating and fixed exchange rates. Currency exchange rates, such as the rate of exchange between the US dollar and the Yen, are said to float when market forces determine the rate, depending on market demand. They are fixed when national governments (or their associated national banks) fix the rates by international agreement and intervene in international markets to hold those rates.
