In fixed exchange rate system, the value of currency is pegged to an 'external standard'
Can the value of this external standard fluctuate and change???
What will be the impact of fluctuation in this external standard on the value of currency??
Dear student,
Under a fixed exchange rate system the exchange rate is fixed by the monetary authority. It can be changed only by the monetary authority and not by any other fluctuation.
Under a fixed exchange rate system the exchange rate is fixed by the monetary authority. It can be changed only by the monetary authority and not by any other fluctuation.