An advantage to floating exchange rates is that they help:

Question

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Floating exchange rates can help insulate countries from recessions starting in other countries. This is because the value of the country's currency can adjust to changes in the global market, making the country's exports more competitive and stimulating demand for its goods and services. In contrast, with fixed exchange rates, a country's currency value is tied to another currency or a basket of currencies, which may not accurately reflect the country's economic situation or trade conditions. Floating exchange rates also allow for easier adjustments to balance of payments imbalances and greater flexibility in monetary policy.

An Advantage to Floating Exchange Rates Is That They Help