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Current Exchange Rate Systems


There are several exchange rate systems which are used to reduce the risks of currency fluctuation.

  1. Fixed Rates. Where one currency will tie its currency to that of another country's currency on some ratio basis. For example: 67 yen to one Singapore dollar, or 1 Swedish Krona to 5.9 Swiss francs rupees.
  2. Pegged Rate.
  3. Floating Rate. Where the daily trading of currencies forces the price up or down depending upon the value ascribed to that currency by the buyers and sellers. If the seller's country has just lost a war, the sale price will likely be lower than if the war had been won. Through such floating rates, the value of the dollar has fallen 30% against the euro in less than a year, even though the basic productivity of workers in the U.S. as compared to the workers within the eurozone has changed very little.
  4. Currency Board. This method is a variation of Fixing and Pegging. See Currency Boards.

 

      5.  Monetary Union.  See this website, Monetary Unions.

      6.  "Izing".  This suffix is short for "euroizing" or "dollarizing"

           where a country simply adopts the currency of another

           country without any agreements for sharing the

           management of the currency.