Chapter 6 Part 1 - Foreign Exchange Rates

Chapter 6 Part 2 - Balance of Payment →
Economics Class 12
Macroeconomics

What are Different Methods of Determining Exchange Rate?

Last updated at August 2, 2026 by

There are 3 methods to determine currency exchange rate:

  1. Flexible or Floating Exchange Rate
  2. Fixed Exchange Rate
  3. Managed Floating Exchange Rate

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How is Exchange Rate Determined? Flexible Exchange Rate (Floating) Fixed Exchange Rate Year 2020 2021 2022 Rate 70 75 80 Year 2020 2021 2022 Rate 70 70 70 Exchange Rate fluctuates Exchange Rate is fixed Managed Floating Exchange Rate Year 2020 2021 2022 Rate 70.1 70.4 70.3 Exchange Rate Fluctuates within a range

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