A floating exchange rate is a type of exchange rate regime wherein a currency's value is allowed to fluctuate according to the foreign exchange market. A currency that uses a floating exchange rate is known as a floating currency. The opposite of a floating exchange rate is a fixed exchange rate. The exchange rate regime is the way a country manages its currency in respect to foreign currencies and the foreign exchange market. ... Various currencies A currency is a unit of exchange, facilitating the transfer of goods and services. ... In finance, the exchange rate between two currencies specifies how much one currency is worth in terms of the other. ... A floating currency is a currency that uses a floating exchange rate as its exchange rate regime. ... A fixed exchange rate, sometimes (less commonly) called a pegged exchange rate, is a type of exchange rate regime wherein a currencys value is matched to the value of another single currency (most often the US Dollar), to a basket of other currencies, or to another measure of value...
Economists generally think that, in most circumstances, floating exchange rates are preferable to fixed exchange rates because floating rates are responsive to the foreign exchangemarket. However, in certain situations, fixed exchange rates may be preferable for their greater stability. An economist is someone who studies Economics. ... In the foreign exchange market, the currency traders goal is to earn as much profit as possible as a result of purchasing and selling foreign currencies. ... Chichicastenango, Guatemala traditional market Market stall in internally displaced persons camp in Kitgum, northern Uganda Mercado dos Lavradores, Funchal (Madeira Islands) A market is a mechanism which allows people to trade, normally governed by the theory of supply and demand. ...
There is no currency in the world for which its value is absolutely determined by the foreign exchange market; in cases of extreme appreciation or depreciation, the central bank will intervene to stabilize the currency. Thus, the exchange rate regimes of floating currencies may more technically be known as a managed float. A central bank is an entity responsible for monetary policy of its country (or in the case of the EU, group of member countries). ...
External links
Foreign Market Watch (http://www.foreignmarketwatch.com/index.shtml) Analysis and Commentary on the major currency pairs
A floating exchange rate or a flexible exchange rate is a type of exchange rate regime wherein a currency's value is allowed to fluctuate according to the foreign exchange market.
A currency that uses a floating exchange rate is known as a floatingcurrency.
The opposite of a floating exchange rate is a fixed exchange rate.
Floatingrate notes (FRNs) are bonds that have a variable coupon, equal to a money market reference rate, like LIBOR or federal funds rate, plus a spread.
The spread is a rate that remains constant.
At the beginning of each coupon period, the coupon is calculated by taking the fixing of the reference rate for that day and adding the spread.
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