Exchange Rates Regimes

Exchange Rates Regimes

Introduction

Exchange rate regime is the set of rules that determine intervention monetary authorities in the foreign exchange market, and therefore the rate behavior changes. There is a wide variety of exchange rate regimes, which are distributed between two extremes: floating exchange rates and flexible exchange rates. Both regimes are discussed in this paper.

Discussion

Differences between Floating and Fixed Exchange rates Regimes

Floating exchange rate is characterized by different features. They have an established official parity or central rate; it is also possible situation in which there is no official exchange rate denominator. There are no specific margin ...