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A fixed exchange rate system is where a currency has a fixed value against another currency or commodity. The best known example of such a system was the gold standard which operated in the 19th and early 20th centuries. This valued one pound sterling at 0.257 ounces of gold and holders of pounds could exchange them for gold at that rate. Today the Chinese renminbi is pegged at a fixed rate against the American dollar.
A floating exchange rate system is one where its value is determined by the market forces of demand and supply for that currency. Most of the world’s currencies today are left free to fluctuate though government may sporadically intervene to iron out extreme volatility
marlinbito answered the question on July 8, 2018 at 17:53
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