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Established in 2006 as a Community of Reality

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Economic concepts: floating currency


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Join date : 2012-12-21

Economic concepts: floating currency Empty Economic concepts: floating currency

Post by rocky on Tue 16 May 2017, 1:50 am

[rtl]Economic concepts: floating currency[/rtl]

Flotation is leaving the exchange rate of a currency, any equivalence with other currencies, is determined according to the forces of supply and demand in the cash market.
The different governments' policies towards their currencies float according to the level of emancipation of the national economy, and the adequacy of its performance, and the flexibility of its production apparatus. It is divided into the following floating formats:
Free float: it means leaving the currency exchange rate changes is determined freely with time, according to market forces, and only the intervention of monetary authorities to influence the speed of change in the exchange rate, not reducing that change, and follows this form of currency float in some advanced industrial capitalist countries such as the US dollar The pound sterling and the Swiss franc.
Flotation orbit: it means leaving the exchange rate is determined according to supply and demand with the resort's central bank to whenever the need arises to modify this price in exchange for the rest of the currency intervention, in response to a set of indicators such as the amount of the gap between supply and Tlpfi exchange market, and the prices of spot and forward exchange, and developments in the parallel exchange rate markets, and follows this form of floating in some capitalist countries and a group of developing countries, which pegs its currency to the US dollar exchange rate or the pound sterling or the French franc (previously) or a basket of currencies. Flotation policy has evolved to become one of the most important tools used by the monetary authorities to achieve economic goals, and the exercise of this policy intervention procedures including: the impact on the money market by influencing the movements of supply and demand, through the local currency selling or buying, influencing the interest rate to raise the price of discount or decrease. Impact on the volume of foreign trade through the quantification of import or export promotion.

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