Fixed Exchange Rates
· Floating Exchange Rate: this is when the govt does not intervene in the foreign exchange market but always market forces to determine the level of a currency
· Fixed Exchange Rate: This occurs when the govt seeks to keep the value of a currency fixed against another currency
· Exchange Rate Mechanism ERM. This was a semi fixed exchange rate where EU countries sought to keep their currencies fixed within certain bands against the D-Mark. The ERM was the forerunner of the Euro
See also:
Essays and Revision Notes on Exchange Rates
Exchange Rates revision notes and essays
Factors influencing exchange rates
Determination of exchange rates in free markets
International Trade Revision Notes
Exchange Rate Essays
- Effects of a falling Dollar
- Why Dollar keeps falling
- Discuss Policies to Stop the Dollar Falling
- Does Devaluation Cause Inflation?


