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Meaning of floating exchange rates

 

 

 

Floating exchange rates

 

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Business glossary

 

Meaning of term floating exchange rates :

 

A floating exchange rate system is where the exchange rate is determined by demand and supply in the foreign exchange market without any government intervention. An increase in demand will lead to an appreciation of the currency (assuming constant or lower supply) while a decrease in demand (assuming constant or higher supply) will lead to a depreciation of the currency.

 

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