Flexible Exchange Rates
Flexible exchange rates are market determined prices of foreign exchange which move in response to supply and demand and are not pegged within narrow bands by official purchases. Flexible systems where there are no official purchases are usually called pure floating regimes, and systems with some official purchases are called managed floating regimes. The counterpart to flexible exchange rates are fixed exchange rates, where official central bank purchases or sales of foreign currencies maintain the exchange rate within narrow bands.
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