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Should we have a floating or fixed exchange rate system?

Should we have a floating or fixed exchange rate system?

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Answer #1

Floating exchange system is better because it is determined by the market forces in the medium to long term which is the fair way to determine the value of the money and it also provides flexibility in the hands of the central bank to take necessary policy decisions to control prices while taking care of the overall economic growth.

Fixed exchange system has many costs as the central bank needs to maintain its value through using various monetary tools which may result in negative long term impact on the economy.

So i will go with floating exchange system.

the above is answer..

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