What are possible exchange rate regimes and what is the worldâ€™s most practiced regime currently and...

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Economics

What are possible exchange rate regimes and what is the worldâ€™smost practiced regime currently and why (reasons)? Also discuss thepros and cons of each regime.

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The Floating Exchange Rate A floating exchange rate or fluctuating exchange rate is a form of exchange rate regime in which the value of a currency can fluctuate depending on the foreign currency A currency in which a floating exchange rate is used is known as a floating currency The dollar is a case in point for a floating currency Most economists assume that floating exchange rates are the best exchange rate system possible since they automatically adapt to economic circumstances Such regimes allow a country to dampen the effect of shocks and international business cycles and to mitigate the risk of a crisis of payments in the balance But they also generate See Answer

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