Exchange Rates - : FixedExchangeRate:

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Exchange Rates and FOREX and Currency Flexible Exchange Rate:   an exchange rate for a currency that is determined entirely in the  international market by demand and supply   not gov’t intervention   floating exchange rate Fixed Exchange Rate:   an exchange rate for a currency that is fixed in relation to another  currency.   o Gov’t maintain this pegged rate by buying and selling their own currencies in the FOREX by using reserves of foreign currency held at the central bank.   o They can also change interest rates to influence the exchange rate Managed Float:   a compromise between fixed and flexible exchange rates.  The gov’t will  intervene to smooth out short term fluctuations. Fluctuations in the Exchange Rate: Demand for CDN increases: Demand for CDN exports increases Increased foreign investment CDN interest rates increase
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