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 is determined by the market forces of supply and demand. The exchange rate will adjust to balance the demand for and supply of a currency, based on factors such as trade, investment, inflation, and geopolitical events. The government may have some influence on the exchange rate, but in general, the exchange rate is determined by the market.

Market Forces Are the Determinant of Exchange Rates in a Freely