floating exchange rates

Discipline: Economics

Also referred to as: flexible exchange rates

Floating Exchange Rates, occur under an exchange rate regime, under which market forces of supply and demand determine the exchange rates among currencies.

Not all floating exchange rate regimes are the same. If the rates are free of all government interventions, it is called a free float. If there is limited intervention, then it is called a managed float.

The floating exchange rate regime is contrasted with the fixed exchange rate regime.


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