Give meanings of Fixed, Flexible and Managed Floating exchange rates.

1.	Give meanings of Fixed, Flexible and Managed Floating exchange rates.
Answer» (i) Fixed Exchange Rate-Fixed rate of exchange is a rate fixed and determined by the government of a country and government alone changes it. (ii) Flexible Exchange Rate-The rate of exchange which is determined by the demand and supply factors of different currencies in the foreign exchange market, is termed as Flexible Exchange Rate. (iii) Managed Floating Exchange Rate-A kind of flexible exchange rate system where the exchange rates are adjusted as per the rules and regulations of foreign exchange market, is termed as Managed Floating Exchange Rate.

Answer»

(i) Fixed Exchange Rate-Fixed rate of exchange is a rate fixed and determined by the government of a country and government alone changes it.

(ii) Flexible Exchange Rate-The rate of exchange which is determined by the demand and supply factors of different currencies in the foreign exchange market, is termed as Flexible Exchange Rate.

(iii) Managed Floating Exchange Rate-A kind of flexible exchange rate system where the exchange rates are adjusted as per the rules and regulations of foreign exchange market, is termed as Managed Floating Exchange Rate.

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