3. A currency is free-floating if its exchange rate is
allowed to vary against that of other currencies
Determined by the market forces of supply and
demand
Exchange rates for such currencies are likely to
change almost constantly as quoted on financial
markets, mainly by banks, around the world
4. A movable or adjustable peg system is a system
of fixed exchange rates
With a provision for the devaluation of a currency
e. g. Chinese Yuan renminbi (RMB) was pegged
to the United States dollar at RMB 8.2768 to
$1from 1994 to 2005
5. An exchange rate system which is based on the
free float but with the intervention of the Central
Bank.
Central bank keep the rate at a fixed price by
using its different tools and methods
6. Appreciation of Currency means increasing the
value of currency in terms of others international
currencies based on demand and supply.
Depreciation of currency means reduction in the
value of currency in terms of other international
currencies based on demand and supply.
7. Devaluation of currency means the planed
reduction in the value of currency by the Govt.
based on the fixed exchange rate.
Revaluation of currency means the planed
increase in the value of currency by the Govt.
based on fixed exchange rate.
10. Monetary policies of the central bank
Health of an economy
Trade policies
Currency inflation and deflation
The Balance of Payments
The Law and Order situation
11. The Political Stability
The Market Trends
The Relative Inflation Rates
The Relative Interests Rates
The amount of Investments in the country
The Foreign remittances
