The floating currency exchange rate, also known as a flexible exchange rate, is the movement of a foreign currency exchange rate in response to changes in market forces of supply and demand. The value of a country's currency is determined by market conditions rather than by any direct intervention by the central or national government.
A floating exchange rate is a type of exchange rate regime wherein a currency's value is allowed to fluctuate due to market forces without direct governmental control. However, governments and central banks may intervene to stabilize the currency if necessary.
Pegging is a method used to stabilize the price of a security, commodity, or currency by intervening in the market. This term is commonly associated with maintaining exchange rate stability and supporting commodity prices, like agricultural goods, through governmental action.
