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The market rate will depend on the demand for, and supply of, that currency in the forex (foreign exchange) markets. When there is no intervention in the free market operations by a government or its’ agency a “clean float” is said to exist.
b) A fixed exchange rate is where the government determines the exchange rate for a period of time based on the value of another countries currency such as the US dollar.
c) A managed exchange rate is where the government intervenes in the market to influence the exchange rate or set the rate for short periods such as a day or week.
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