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2006-06-30 02:42:48 · 3 answers · asked by amazinglife_2287 1 in Social Science Economics

3 answers

Well traditionally floating rates are said to be more advantageous when compared to fixed exchange rate's
however there have been cases where fixed exchange rates have actually helped a country:
1. Malaysia managed to come out well of the Asian financial crisis in 97 by adopting a fixed rate for its currency vis-a-vis the dollar.
2. China it is alleged has used fixed exchange rate to boost its exports. Many people feel that the Chinese have kept their currency at extremely cheap levels.... this helps boost its exports.

2006-06-30 03:16:55 · answer #1 · answered by TAR 2 · 0 0

You can be certain that the exchange rates will stay the same.

The downside is that the entirety of economic policy has to focus on maintaining the exchange rate. It does not preclude the existence of inflation - in fact, if the demand for one nation's goods drastically increases, the money supply must likewise increase drastically in order to maintain the exchange rate. This is, by definition, inflation.

For this reason, the fixed exchange rate under the Bretton Woods regime was dropped more than 40 years ago.

2006-07-05 13:42:37 · answer #2 · answered by Veritatum17 6 · 0 0

for one thing it beats inflation

2006-06-30 09:46:20 · answer #3 · answered by Jetty 4 · 0 0

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