Floating Exchange Rate Determination

• Exchange rate


  The price of one currency in another currency
• Determining exchange rate

  1. Demand for the currency

  2. Supply of the currency

  3. Equilibrium point gives the exchange rate
• The exchange rate is the price of the currency being determined, in the currency specified
• The demand and supply of the currency being determined gives the exchange rate
• The equilibrium point of demand and supply gives the exchange rate