In a flexible exchange rate system, currencies appreciate or depreciate in order to achieve market equilibrium.

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In a flexible exchange rate system, the exchange rate is determined by the market forces of supply and demand. If there is an excess demand for a currency, its value will appreciate, and if there is an excess supply, its value will depreciate. This adjustment helps to balance the trade between countries and achieve market equilibrium.

In a Flexible Exchange Rate System, Currencies Appreciate or Depreciate