BANKING AFFAIRS

Detailed explanation-1: -Fixed exchange rates mean that two currencies will always be exchanged at the same price while floating exchange rates mean that the prices between each currency can change depending on market factors; primarily supply and demand.

Detailed explanation-2: -If you travel internationally, you most likely will need to exchange your own currency for that of the country you are visiting. The amount of money you’ll get for a given amount of your country’s currency is based on internationally determined exchange rates. Exchange rates can be either fixed or floating.

Detailed explanation-3: -Fixed exchange-rates are not permitted to fluctuate freely or respond to daily changes in demand and supply. The government fixes the exchange value of the currency. For example, the European Central Bank (ECB) may fix its exchange rate at €1 = $1 (assuming that the euro follows the fixed exchange-rate).

Detailed explanation-4: -A fixed exchange rate – also known as a pegged exchange rate – is a system of currency exchange in which the value of one currency is tied to another.