It is a system where
Exchange Rate is determined by Market Forces of Demand and Supply
In this case, Central Bank does not intervene (interfere) in determining exchange rate
How is Foreign Exchange Rate Determined?
It is Determined at a Point where Demand and Supply Curve Intersect each other
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Note
In Flexible Exchange Rate,
There is appreciation and depreciation of domestic currency
Lets learn more about it in next page
NCERT Questions
No questions in this part
Other Books
Question 1
In the following questions, select the correct answers:
Flexible exchange rate system is also known as :
- Pegged Exchange rate system
- Dirty Floating
- Floating exchange rate system
- Both B and C
C. Floating exchange rate system
