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Flexible Exchange Rate

   Also found in: Wikipedia 0.01 sec.
Floating Exchange Rate
The exchange rate in which the value of the currency is determined by the free market. That is, a currency has a floating exchange rate when its value changes constantly depending on the supply and demand for that currency, as well as the amount of the currency held in foreign reserves. An advantage to a floating exchange rate is that it tends to be more economically efficient. However, floating exchange rates tend to be more volatile depending on the particular currency. A currency with a floating exchange rate may undergo currency appreciation or currency depreciation, depending on market fluctuations. A floating exchange rate is also called a flexible exchange rate. See also: Fixed exchange rate, Crawling peg, Managed float.

flexible exchange rate


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Under the IMF's 20-month package, Sri Lanka agreed to reduce its budget deficit to six percent of GDP in 2010 and maintain a flexible exchange rate to build up foreign reserves to cover over three months of imports.
12, 2009 (TAP) - Asia-Pacific nations pledged Thursday to embrace more flexible exchange rates and stable growth strategies as economies start to scale back their stimulus spending after the global downturn.
Treasury Department said Thursday it has determined China is not manipulating its currency to gain unfair trade advantages but reiterated its call for more flexible exchange rates.
 
 
 
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