The regime whereby the value of a currency is determined by demand and supply conditions in the FX markets is called:

Question

Quizplus · Accepted Answer

A floating exchange rate regime is one where the value of a currency is determined by market forces of supply and demand. The exchange rate is free to move in response to changes in these forces, without any interference from government or central bank interventions. This is in contrast to a fixed exchange rate regime where the value of a currency is fixed against another currency or a basket of currencies, and a pegged exchange rate regime where the value of a currency is allowed to move within a narrow band around a fixed rate. The term "variable" is not commonly used to describe an exchange rate regime.

The Regime Whereby the Value of a Currency Is Determined