Market forces are the determinant of exchange rates in a freely floating exchange rate system.

Name: Market forces are the determinant of exchange rates in a freely floating exchange rate system.
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In a freely floating exchange rate system, the exchange rate between two currencies is determined by market forces of supply and demand in the foreign exchange market. The government or central bank does not actively intervene in setting the exchange rate.

Market Forces Are the Determinant of Exchange Rates in a Freely