6 thoughts on “Floating exchange rates vs. Fixed exchange rates”
Fixed currency†’Commits to what the value of a dollar would be in respect to another countries currency for a set amount of time (ex: 1 dollar = .90 euros for 6 months). Can also occur with gold.
Floating currency†’ allows the market to play it all out
Very good. Could
1) develop floating currency a little more
2) if you can suggest 1970s as a turning point (from fixed-to-dollar to floating) for most of the developed nations, that’s all the better!
Floating currency: The rates are determined by global currency markets in which private investors and governments buy and sell currencies. Each state’s currency has a supply and demand, with prices adjusting in response to market conditions. Through short-term speculative trading in international currencies, exchange rates adjust to changes in the longer-term supply and demand for currencies.
Good. There is now enough for a 4 here.
A floating exchange rate is when the currency of one country fluctuates over the time with the currency of another country. Fixed exchange rate is when these same two currencies have a fixed exchange price and the price does not change. For example, most of the developed countries have floating exchange rates, which fluctuates based on demand and supply, like USD vs. Euro. Recently we have seen the US accusing China of maintaining artificially a fixed exchange rate of their currency, this is the price of USD vs. Yuan does not change over time or based on demand and supply. This creates distortions in the global economy.
Floating exchange rates are more commonly used for the world's major currencies. Rates are determined by global currency markets in which private investors and governments alike buy and sell currencies. Prices constantly adjust in response to market conditions. Fixed exchange rates are when gov'ts decide, individually or jointly, to establish official rates of exchange for their currencies. For example, the Canadian and US dollars were for many years equal in value.
Fixed currency†’Commits to what the value of a dollar would be in respect to another countries currency for a set amount of time (ex: 1 dollar = .90 euros for 6 months). Can also occur with gold.
Floating currency†’ allows the market to play it all out
Very good. Could
1) develop floating currency a little more
2) if you can suggest 1970s as a turning point (from fixed-to-dollar to floating) for most of the developed nations, that’s all the better!
Floating currency: The rates are determined by global currency markets in which private investors and governments buy and sell currencies. Each state’s currency has a supply and demand, with prices adjusting in response to market conditions. Through short-term speculative trading in international currencies, exchange rates adjust to changes in the longer-term supply and demand for currencies.
Good. There is now enough for a 4 here.
A floating exchange rate is when the currency of one country fluctuates over the time with the currency of another country. Fixed exchange rate is when these same two currencies have a fixed exchange price and the price does not change. For example, most of the developed countries have floating exchange rates, which fluctuates based on demand and supply, like USD vs. Euro. Recently we have seen the US accusing China of maintaining artificially a fixed exchange rate of their currency, this is the price of USD vs. Yuan does not change over time or based on demand and supply. This creates distortions in the global economy.
Floating exchange rates are more commonly used for the world's major currencies. Rates are determined by global currency markets in which private investors and governments alike buy and sell currencies. Prices constantly adjust in response to market conditions. Fixed exchange rates are when gov'ts decide, individually or jointly, to establish official rates of exchange for their currencies. For example, the Canadian and US dollars were for many years equal in value.