What are the advantages of floating exchange rates?

Answer 1

An international financial arrangement, the float exchange rate system, central banks intervene periodically to support a countryÃ?s currency and stabilize any volatile fluctuations in the foreign exchange rates. The advantages of this are that the float attempts to combine both the fixed and flexible exchange rate systems, depending on the instability. Less instability, less intervention is needed; grater instability more is needed by the central banks and less freedom to pursue independent domestic monetary policies because of the frequent uses their money supplies to calm disturbed foreign exchange markets. One of the biggest disadvantages of a managed float is determining the timing and amount of the instability and the necessary intervention.

Answer 2

The advantages of floating exchange rates are: Flexibility and automatic adjustment, Flexibility in determining interest rates, Greater insulation from other countriesâ?? economic problems, Lower foreign exchange reserves.

Answer 3

The advantage is simple: It keeps the money flowing around the world. A more complex answer would involve the exchange of goods and services, comparative value and advantage and some other rules of business and economics. Business is conducted in areas where there is the possibility of a profit. Currency is no different. One disadvantage: You can lose your shirt, house, family, etc., by trying to be one of those foreign exchange traders as advertised on television. Leave it to people with a lot more time, money and some really fast computer trading systems.

Answer 4

An international financial arrangement, the float exchange rate system, central banks intervene periodically to support a countryÃ?s currency and stabilize any volatile fluctuations in the foreign exchange rates. The advantages of this are that the float attempts to combine both the fixed and flexible exchange rate systems, depending on the instability. Less instability, less intervention is needed; grater instability more is needed by the central banks and less freedom to pursue independent domestic monetary policies because of the frequent uses their money supplies to calm disturbed foreign exchange markets. One of the biggest disadvantages of a managed float is determining the timing and amount of the instability and the necessary intervention.

Answer 5

What are the advantages and disadvantages of a managed float exchange rate?

Answer 6

The fluctuating nature of the exchange threat poses a threat rather than an oppurtunity however you can benefit from the rise or fall of exchange rates by investing in derivative securities?

Answer 7

i dunno, I'm askin the same question myself...this is my assignment question lol