FLEXIBLE EXCHANGE RATES

Fixed ex change rates are one of the cornerstones of today’s international monetary system-the other important system is flexible exchange rates. A country has flexible exchange rates when exchange rates move purely under the influence of supply and demand: In such a system, the government neither announces an exchange rate nor takes steps to enforce one. Another term often used is floating exchange rates. which means the same thing Today, flexible exchange rates are used by the three major economic regions-the United States’, the countries of Euro land, and japan. For these three regions, the movements of exchange rates are determined almost entirely by private supply and dernand for goods, services, and investments

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