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aliya0001 [1]
2 years ago
6

​Currency markets operate under a system of _____ in which the prices of different currencies move up or down based on the deman

d for and the supply of each currency.
Business
1 answer:
neonofarm [45]2 years ago
4 0

Answer: Floating exchange rate                

             

Explanation: The floating exchange rate is a mechanism under which a country's exchange prices are set by the supply and demand-based foreign exchange market compared to other currencies. It compares with a fixed exchange rate, wherein the government decides the rate completely or mainly.

Floating currency regimes mean that lengthy-term currency price movements represent relative economic power and country-to-country rate of interest differences.

A currency that is too high or low may have a negative impact on the country's economy, impacting trade and debt-paying efficiency. The state or banking system would try to take action to bring their currencies towards a more desirable level.

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