What is Exchange-Rate Regime and how does it Work in running a Business?

  • April 2014
  • Posted By Ninoslav
  • 0 Comments

You may find this word a little difficult but, the exchange-rate regime actually describes the process by which monetary system is managed while it is being compared with other systems in foreign market. You may relate it to the policy of money and both, the system and the policy are dependent upon each other.

What are the various exchange-rate regimes in the market?
You may come across various regimes in the market. There are exchange rate called floating rate, peg exchange rate or float, and exchange rate that is fixed.

What is the floating and peg exchange-rate regime?
In the exchange-rate regime, the floating rate is indeed an important one you may come across. Most countries use them as dollar, pound, as yen or as euro. All these currency systems fall under this regime.

In the peg rate regime, the value is maintained in a certain value. They may be flexible or you can adjust them accordingly. Under this system you will find divisions such as running pegs, running bands or bands having horizontal systems.

What is fixed exchange rate regime?
You might have come across this word often in a market study but do you know this regime is also a very important part of a market system. They can be easily transferred to another currency. The reserves in foreign monetary systems have the currency in domestic values also.

We have read what exchange-rate regime is and how it determines the currency in market. To learn more about foreign market policies, read “What is exchange-rate flexibility and how it is helpful in money business?” read this with interest and study the market vividly and you can easily grasp the market regime policy with time period.

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