6 Pros And Cons Of Floating Exchange Rate
On the other side, in the absence of intervention, a pure floating exchange rate system does not require large foreign reserves. Hence, floating exchange rates are suitable for countries with limited foreign exchange reserves, such as countries with negative trade balances.
Some governments attempt to influence the value of their currency. For example, China has sought to keep its currency undervalued to make Chinese exports more competitive.
Thus, a floating exchange rate allows a government t […]