floating exchange rate

  

Definition

System in which a currency's value is determined solely by the interplay of the market forces of demand and supply (which, in turn, is determined by the soundness of a country's basic economic position), instead of by government intervention. However, all central banks do try to defend these rates within a certain range by buying or selling their country's currency as the situation warrants.

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  • When traveling to a new country, it is important to understand that a floating exchange rate may surprisingly alter the monetary value of the currency which you are exchanging.

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  • You need to be able to quickly adapt to a floating exchange rate and do your deals when the time is right.

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  • Based on the floating exchange rate, we decided to buy our furniture at the IKEA in Canada. Our dollar was worth so much more than we bought furniture there a year ago.

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