when the supply and demand of currencies in the foreign exchange market determines their relative values, this is known as

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04-11-2022
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when the supply and demand of currencies in the foreign exchange market determines their relative values, this is known as

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varshamittal029 varshamittal029 · Answer 1 · 2022-11-12T04:33:26-05:00

The foreign exchange rate is the cost of the home currency in relation to another currency. The aim of foreign exchange is to compare various currencies to show their relative values.

When the relative values determine the demand and supply of currencies in the foreign exchange market, it is known as, flexible or floating exchange rate.

Flexible exchange rates are those that are based on the worldwide supply and demand of a given currency. In other words, they are market-determined foreign currency rates that are neither tied to nor regulated by central banks but are subject to quick changes in response to supply and demand.

Fixed exchange rate refers to the alternative situation in which central banks participate in the market by making purchases and sales of both foreign and domestic currency in order to keep the exchange rate within predetermined bands.

Learn more about Foreign Exchange Rate here: https://brainly.com/question/6675565

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